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the country and Congress that there should be some analogy between the use of copyrighted music for broadcasting by radio, as there is a charge made for its use on phonograph records.
Representative LANHAM. May I ask you a question there, Senator? Senator Dill. Certainly.
Representative LANHAM. I do not know as I got the analogy. As I understand on the phonograph record the composer is entitled to a small royalty, 2 cents on each record.
Senator DILL. Yes, sir.
Representative LANHAM. And I play that record in my home to a little circle of friends, and they get 2 cents on my record; and you play it in your home, and they get 2 cents on that record and 2 cents from Mr. Bloom's record here.
Now, when you apply that to the radio, numerous groups are hearing it all over the country. Do you think they should pay in each group, as in the talking-machine record, or is the radio to pay as one machine?
Senator DILL. Each performance by the radio becomes a performance for profit, especially when time is sold. Under the present law they have a right to charge that profit, and they are charging various prices. And there is very great confusion. The music is put on and withdrawn; and while it is not identical, as you set out, it is giving the copyright owner a greater power than they have under the phonograph record.
Representative LANHAM. It is not intended to restrict to the radio performance the charge for a single record ?
Senator DILL. No; they would pay it if they use the music. I have not put in the amount you notice.
Representative LANHAM. No; but I notice you specify cents rather than dollars.
Senator DILL. No; but I will leave that to the committee. This committee had hearings about a year ago and had some information on that subject.
I have no apology for having changed my mind. It is said that a wise man changes his mind, and the man who does not change his mind has no mind to change. I think the whole situation has changed in the radio world.
I think that is sufficient preliminary statement, Mr. Chairman.
The CHAIRMAN. The Chair will call attention to the statement originally made, that those who are in favor of the bill are at liberty to proceed.
Senator Dill. I think Mr. Klugh, representing the broadcasters' association, wants to be heard.
STATEMENT OF PAUL B. KLUGH, REPRESENTING THE NA
TIONAL ASSOCIATION OF BROADCASTERS, NEW YORK CITY
Mr. KLUGH. Mr. Chairman and gentlemen, my name is Paul B. Klugh, representing the National Association of Broadcasters, a nonprofit-making organization having as members radio stations located in all parts of the United States and totaling in membership approximately 200 members, and consisting of both large and small stations.
Mr. Chairman, in order to expedite this hearing we have made a suggestion here for the program for the proponents of the bill, and having discussed this program with those who intend to speak, the intention is to limit the thing so that it will come to a conclusion as rapidly as possible; and with your permission at my conclusion I would like to suggest the speakers who will appear after me.
The CHAIRMAN. Very well.
Mr. KLUGH. I would also like to say to members of the committee that reports have reached us that a great many letters and some telegrams have come in to the committee members from listeners representing the public and undoubtedly the large number of those letters would cause members of this committee some embarrassment if they were called upon to answer each communication individually. In fact, I have been told that it would be physically impossible to do it, and for that reason I am authorized by the members of our association to say to this committee that we will be very glad to call the attention of those listeners who have written to members of this committee to the fact that their communications have been received; that they have been received in such numbers that it is not feasible to answer them individually, and to assure the listeners that they have been received and that they are being given consideration, and through this method, Mr. Chairman and gentlemen, attempting to relieve you of any embarrassment that may result from the quantity of letters and telegrams that you have received.
Representative Bloom. Mr. Klugh, were you surprised about the number of letters received, or was it your intention when you broadcasted to get as many letters and telegrams to the members of the committee as you possibly could get?
Mr. KLUGH. Regarding the surprise, Congressman, I do not know how many have been received. In the absence of that knowledge
The CHAIRMAN (interposing). I will say that the chairman has received somewhere in the neighborhood of 4,000.
Representative Bloom. Well, was this a surprise to you that the response
was so great, or did you do it to get this number of responses? Mr. KLUGH. We did not know what number of responses we would get.
Representative Bloom. This speech that you just now delivered, it was practically the same as you delivered two years ago, lacking one day, on April 4, 1924, you made the same statement, in substance, that you are making now, so that it must be that you knew that the response would be so great and naturally embarrass the members of the committee that they could not answer them. You made the same statement two years ago and offered to broadcast a reply in general for the members of the committee; that is a fact, is it not?
Mr. KLUGH. Yes.
Representative Bloom. Then you knew and did it, as you did two years ago, that all of those letters would embarrass the committee. It is impossible to answer them. I have had two people opening the letters we received. So do you think it is fair to place the Members of the Senate and House in the same embarrassing position that you did two years ago? And then you are supposed to broadcast. And how can you broadcast to our people who have not heard the statement here?
Mr. KLUGH. I have not stated that the letters were for the purpose of embarrassing the committee.
Representative BLOOM. I will read some of them to you when you finish, and we will let the committee say.
Mr. KLUGH. Very well.
Representative Bloom. And you made the same statement two years ago
you I would like to put that in the record, Mr. Chairman. The CHAIRMAN. You mean the old statement?
Representative BLoom. No; the statement made by him now; showing that it is done for this purpose. It is in to-day, and I want to get right under this statement the statement that he made two years ago, on April 5, 1924.
The CHAIRMAN. There is no objection to that.
Representative LANHAM. Would there be any objection to incorporating into the record the statement which has been broadcast a few evenings ago seeking these letters on behalf of the broadcasters to be sent to the committee, in order that we may know what has been said to these people? And I would like to know, in that connection, what opportunity was given to any people representing the opposition to speak against the bill.
The CHAIRMAN. If that statement can be produced, I presume there is no objection. I presume you can furnish it?
Mr. KLUGH. We would be glad to furnish it to the committee. I think a copy has been furnished to yourself, and also to Congressman Vestal, the chairmen of the two committees.
The CHAIRMAN. I do not remember having seen it, but whatever it is, there is no objection to having it in the record.
Mr. KLUGH. None at all.
Representative Bloom. May I ask how many copies of the different speeches are going to be put into the record ? Mr. KLUGH. I do not
know that. According to the Representative Bloom (interposing). How many different copies did you send around to the different broadcasting companies, asking them to broadcast? How many different kinds ?
Mr. KLUGH. Two different kinds.
Representative Bloom. If there are three you do not object to me putting them in?
Mr. KLUGH. No.
Representative ESTERLY. I have no objection to the people asking us about this legislation. I am going to answer every letter that comes to me. I think it comes in the routine of a Congressman's office to keep up with the work. All the letters are opened. I think the radio people are perfectly right. It arouses public attention to the bill before us.
Representative LANHAM. They are only on one side.
The CHAIRMAN. I think it is understood all these statements go into the record. Mr. Klugh can continue if he desires to.
Mr. KLUGH. Thank you, Mr. Chairman. I would like to point out that the two bills you are considering, while they have been said to be broadcasters' bills are not wholly acceptable to us. That is to say, there are certain phases of these bills that we are not in favor of
But I would also like to say that the bills as presented represent what we consider to be a practical method of settling a controversy which has now been going on for about three years, and which needs some kind of a fair settlement. We do not know that this is the only way that this matter could be settled satisfactorily, and we, in reality, come before the committee with an open mind, but appearing as proponents of this bill because it does offer a practical solution of the problem. If there is any better way of settling this controversy we will lend a quick ear and certainly be glad to consider it, and if it meets with the situation, give it our unqualified support.
When broadcasters started to use copyright music, none of them had any idea of its ramifications. In those days broadcasters considered themselves in the light of public benefactors, inasmuch as they were all rendering a public service with no visible means of income. It seemed impossible to collect from the listeners, and money for the upkeep of the stations was hard to find.
It was at this particular period that the American Society, came down so heavily for license fees, and there is little wonder that broadcasters rebelled.
The situation, however, has changed now that at least 70 per cent of the regular broadcasters of the country are charging for the use of their facilities, by advertisers, and now that a partial solution of the troublesome matter of income has been developed, broadcasters have come to the conclusion that they should pay for the use of copyrighted music. While court decisions have been upon both sides of the controversy, broadcasters feel that when the Supreme Court refused to review this matter, they had gone far enough along that road.
Radio programs are 90 per cent music, and nine-tenths of this music is controlled by the American Society, through its pooling arrangement with copyright owners. A broadcasting station can not successfully operate without the music of this society. It is as necessary as raw material to a manufacturer. Supposing a furniture manufacturer finds that 90 per cent of his raw material consists of lumber, and 10 per cent of casters, hinges, hardware, and mirrors. Then supposing he finds that his lumber is controlled by an organization who pool their interests and charge what their fancy
dictates. Would that be a sound position for the furniture manufacturer? Broadcasters are in no different position with respect to music.
If broadcasters wanted to obtain music without payment, or at a low payment, then there would be some basis for the opposition which comes from the American Society. We can not, however, discover one valid argument which can be advanced against a proposal to pay fairly and liberally for the use of copyrighted music to every copyright owner, whenever copyrighted music is used, whether he be a member of the American Society or not. We have no desire to secure this music upon a low basis, but, on the contrary, are willing to pay fully and fairly for its use. What we do desire is permanency, so that a broadcaster may know whether he will be in business next year or the year after.
Furthermore, any arrangement made with the American Society does not take into consideration those writers outside of the American Society, who at times are more in need of payments than the established members of the society. Therefore we believe our proposal is fair from every standpoint.
Then there is the public interest to consider. As matters stand at the present time, the American Society withdraws musical numbers from their licensed users at will. This was done in the cases of Rose Marie, Nanette, and others. So far as the public interest is concerned, it is made up of a desire to hear the music it wants to hear. If the public knows that the broadcaster pays for the use of his music, then he sees no reason why certain popular numbers should be withdrawn at the height of their popularity.
At the fourth national radio conference, held in Washington, and called by Secretary Hoover on the 9th of November last, this matter of copyright was considered by Committee No. 9, and the report of that committee, as made by Congressman White, chairman of the committee, was to the effect that the recommendations of that committee be called to the attention of Congress, with the hope that some remedial legislation would be enacted; and that, in effect, is what you are considering this morning in these two bills.
In 1909 a copyright law was passed. That is the law of the land to-day. It contains a so-called mechanical paragraph covering the use of copyright music by mechanical reproducers, such as phonograph records, player-piano rolls, and others.
If radio had been known at that time, it would undoubtedly have been included, because radio is a mechanical reproduction.
Broadcasters are trying to have this mechanical paragraph enlarged so that it includes radio. We have no interest in the rate paid by phonograph-record manufacturers. All we wish is the principle applied to radio, and a new rate set for the use by radio, which may be as high as Congress or any other constituted authority may, in its judgment, determine as being fair and equitable. The career of radio has been one of chaos extending in a long line from the producer of supplies of manufacturing down to the ultimate listener. It is time that at least one portion of this chaos be removed, and that a fair and just settlement be made of the matter which has been acutely controversial ever since broadcasting started.
We shall try to have the various subjects and divisions of these bills in which the committee will be interested from the standpoint of its opponents described by various advocates of the bill. Our counsel, Judge Tuttle, is here to go into the bill in detail. And it would be using the committee's time for these features that we have to stop to touch upon the phases which he expects to go into so thoroughly.
And other phases of the bill divide themselves into subjects which will be described by individual speakers. So that, with this as an introductory, if I am permitted I would like to call upon a broadcaster, an actual owner of a station, to state to the committee his views with respect to this bill, and his experience on the matter of copyright.
Representative LANHAM. Mr. Chairman, may I ask Mr. Klugh one question?
The CHAIRMAN. Certainly.
Representative LANHAM. With reference to the statement that he comes representing a nonprofit organization: You mean a nonprofit organization so far as these stations in their aggregate organization or their national organization are not for profit? But the individual broadcasting stations operate for profit now, do they not?