Mr. SHEPARD. That is my private opinion. They do not have to pay that. That would be the maximum that they pay.

Representative BLOOM. But if a station is broadcasting merely educational things and should put on a classical program, do you think they should pay the same as you do when you are getting $100 or $200 an hour for it?

Mr. SHEPARD. That is another matter.

Representative BLOOM. Yes; I should think it is.

Mr. SHEPARD. I do not see how I can answer that question, because I do not run that kind of a station. It seems to me that is between the man that controls the music and that station. I do not care what exceptions are made in the bill. If exceptions are made for educational institutions I would have no objection to that.

Representative MCMILLAN. And in the absence of any rate the society may arbitrarily prescribe a rate for you and a much higher rate for some one else?

Mr. SHEPARD. That is correct.

Representative PERKINS. Do you not think we should take into consideration the number of listeners-in who are reached?

Mr. SHEPARD. Any basis which is equitable. I am not arguing for all stations under like conditions.

Representative BLOOM. What is the sum total of business that you did last year in dollars and cents?

Mr. SHEPARD. I have not the figures, but they are surprisingly

small.

Representative BLOOM. About how much for just broadcasting? Mr. SHEPARD. They do not cover expenses.

Representative BLOOM. How do you make your profits, then? Mr. SHEPARD. We do not make any. It is an intangible profit in good will.

The CHAIRMAN. Would it not be a little better if we proceeded with the discussion of the bill, Mr. Bloom?

Representative BLOOM. Yes.

Senator SMITH. Mr. Chairman, has there been any program mapped out here for certain witnesses to be heard pro and con? Have witnesses been subpoenaed here to testify for the bill and witnesses to testify against the bill? IIas such a program been worked out? The CHAIRMAN. There have been no subpoenas issued. Representative BLOOM. All sides are here.

The CHAIRMAN. Mr. Klugh, if I may make the suggestion, I think it might be a good plan at this stage of the hearing to have some one produced who could discuss the terms of the bill. I only throw that out as a suggestion. I think it would be well for us to get some comprehensive idea of what this bill is intended to do. We have more or less information ourselves about the boradcasting business. After a discussion of the bill, if we desire and if you desire to put on anybody you can explain to a greater extent the practical features of the business, but, speaking for myself, I would like to know something about this bill and to have it discussed, and for that purpose I would suggest, if it appeals to you, that you have your counsel deal with the provisions of the bill as applied to the industry. Following that if we want to supply any facts with reference to the practical features relating to the industry we can make inquiry.

Representative PERKINS. May I make a suggestion, Mr. Chair

man?

The CHAIRMAN. Certainly.

Representative PERKINS. I would suggest that when a witness appears to make a statement he be permitted to complete his statement and that questions be withheld until the statement is completed. The CHAIRMAN. I think that would be a better plan.

Mr. KLUGH. That plan would be entirely satisfactory, Mr. Chairman. However, we have two actual owners of stations here who find it necessary to leave town quite early to-day. Our idea was to have these actual owners make their statements, which will require only two or three minutes, in order to give you a picture of the matter.

The CHAIRMAN. If that can be confined to two or three minutes there will be no objection, but I do not like to use a great deal of time covering these private and largely personal matters relating to the conduct of a station when we have a principle here involved in this bill which we would like to understand. If those witnesses will take only two or three minutes that will be satisfactory.

Representative BLOOM. That will not preclude any cross-examination on any statement that they make, Mr. Chairman?

The CHAIRMAN. Not at all.

Mr. KLUGH. I would like to call Mr. Crosley, of Cincinnati. Mr. Crosley represents the Crosley Radio Corporation, Station WLW, of Cincinnati.

Senator DILL. Before that is done I think we should have an understanding now that only members of the committee shall question witnesses. Otherwise, you will have everybody in the room questioning witnesses.

The CHAIRMAN. I think that is a very much better program for the committee to pursue, and, unless there are objections, we will proceed in that way.

STATEMENT OF POWEL CROSLEY, JR., REPRESENTING THE CROSLEY RADIO CORPORATION, STATION WLW, CINCINNATI

Mr. CROSLEY. I want to say, first, Mr. Chairman, that our primary interest in operating a broadcasting station is not for direct profit. We wish to operate our station in order to render a service. It is true that we sell a small amount of time, but the revenue derived from the sale of that time is put into paid programs; in other words, programs where the talent is paid. At no time has the revenue from the station equaled the cost of preparation of the program.

My first experience in this matter was several years ago when, according to my understanding, it was difficult to make a contract with the Society of Authors, Composers, and Publishers representing 80 per cent of the owners of copyright that would be permanent; that would be on a basis that we knew what we would have to pay for any length of time.

We have been operating broadcasting stations for approximately five years. We have been operating on a continuous license for 90 days which has been renewed from time to time, and we expect so long as we are able to render service that that will be continued in the service. That is at least our belief.

When we learned that it was impossible to make a contract covering a long period of time, we decided not to use any of the society's music. We endeavored to carry out that program. At least one number, however, contrary to my instructions, was played over our station. We were thereupon sued for the playing of that number. The decision in the lower court was in our favor. It was carried to the court of appeals, where there was a decision against us, putting us in the position that if we accidentally or intentionally played a number controlled by the owner of any copyright we would be subject to damages to the extent of $250, as I understand it, according to the present law.

We were informed that we had infringed at least 50 times during the period that this case was being tried through the courts; that papers were being prepared to bring a suit individually on each one of those counts on which there might be collected $250 on each one of them. We therefore immediately undertook a settlement with the society which resulted in the ending of the case on both sides. Unfortunately, however, before the attorneys on both sides had withdrawn it, it had gone to the Supreme Court and they had refused to review the matter.

In making that settlement the first demand made upon us by the attorney for the society was for a very considerable sum-I can not tell you the exact amount offhand, but, as I recall it, it was between $20,000 and $30,000. Remember that during that time we had not intentionally been playing music controlled by the society. The matter was finally settled on a basis agreeable to both of us, or, of course, there would have been no settlement, wherein we paid somewhere between $3,000 and $4,000, which was in the form of $1,000 a year during the period of time that this controversy was going on in the courts, at which time we were trying not to play any of the society's music, playing this 90 per cent in the public domain, so called.

However, we had difficulty with the orchestra leaders, who would play a number under another name, and things of that sort, contrary to the instructions to the studio directors, there would be numbers that would creep in. No doubt there were several of them.

However, the present basis on which we are working is to pay $1,000 a year. We have a somewhat more favorable arrangement than the general contract that is offered to broadcasting stations, because where a program is furnished from remote control-that is, from a hotel or some other outside house-wherein we derive no revenue from it, there is no additional fee over $1,000 that we pay. However, if anyone subscribes to a program and pays us any revenue for it, either that so-called advertiser or that person who is running that portion of the program pays $20 an hour.

Now, this contract that we have lasts for this year. I do not know what it will be next year. I can readily appreciate that we may be asked to pay an amount that would no longer justify us in operating our station. I state that purely as an expression of opinion. We are operating our station, and certainly we have never received enough income from it directly to pay any more than for a portion of the programs. If we receive $1,000 for an hour program, that money is put back into another program that we are not paid for. In other words, our object is to continously give the best service we can. If anyone were to ask me whether it is profitable

for us to operate our broadcasting station, I could not answer directly that it is or that it is not. I believe that it is.

Representative BLOOM. Do you sell sets?

Mr. CROSLEY. Yes.

Representative BLOOM. Do you not make your profits out of the sets that you sell?

Mr. CROSLEY. Yes.

Representative BLOOM. Will you please tell the committee how much you make out of the sets that you sell.

Mr. CROSLEY. We make varying degrees of profit.

Representative ВLOOM. Is not that the reason you broadcast? Mr. CROSLEY. Remember, please, that when we broadcast the people who listen to our station have already bought a radio set. Representative BLOOM. Yes; but you want to sell them tubes, etc. Mr. CROSLEY. In the form of good will if we were in

Representative BLOOM. You remember what Mr. Hoover said about good will, do you not? That is about the principal thing in broadcasting.

Mr. CROSLEY. Yes; but who can figure the value of that good will? I can not.

Representative BLOOM. You are doing it for some reason? You are doing it to get money out of it, are you not?

The CHAIRMAN. Mr. Bloom, will you not let him conclude what he has to say?

Representative BLOOM. But the three minutes allowed him have passed. I thought I could examine him after the three minutes. The CHAIRMAN. Do you want to extend his time?

Representative BLOOM. No. I would like to have some one talk about this bill.

The CHAIRMAN. That is my desire, but Mr. Klugh wanted to put this gentleman on because he desires to get away.

Mr. CROSLEY. I think I can conclude with one or two paragraphs. I simply want to ask Congress to make some basis wherein we may know what we are to pay, or wherein we can deal individually with a copyright owner. When we sell our merchandise to a jobber he deals individually with us. We can not deal individually in this case with the owner of a copyright.

I think the precedent is well established in the law of 1909, wherein after great discussion it was decided to be necessary to establish a rate for photograph records and musical rolls. I think that the same principle might well apply without establishing any further precedent to broadcasting.

I am not here to discuss the amount we would pay, but I do feel that the logical way to do it is to fix the sum that we would have to pay for each number that we broadcast.

Representative LANHAM. With reference to the man who holds an individual copyright on one piece of music, do you think he should also have the right to refuse to permit that piece of music to be broadcast at all?

Mr. CROSLEY. Most certainly.

Representative LANHAM. For instance, John Doe is a theatrical man and he has composed a piece of music that he uses in his act. He does not want that to become public because it will interfere with

his act. Do you think that a man holding a copyright also has the right to prevent the public performance of his act?

Mr. CROSLEY. Most certainly.

Representative BLOOM. Prior to 1909 there was no law at all pertaining to mechanical instruments.

Mr. CROSLEY. I think that is the reason that the law of 1909 came into effect.

Representative BLOOM. That is the reason that the law of 1909 was made. Now, do you think that it is better for the broadcasters to deal indivudally with the authors and composers than to deal with the publisher or the society?

Mr. CROSLEY. I think it is much better, especially in this case where the society is in a position to absolutely dictate the terms and to place them at any figure.

Representative BLOOM. Would not an indivdual have the same

right?

Mr. CROSLEY. Yes.

Representative BLOOM. Would you not be dealing with thousands and thousands of individuals? You would have to go to each one of them and deal individually. You would have to find out where they are, whether they are in France or England or Italy. Do you not think it better to deal with the society where you can get what you want? Why can not I as an author or composer charge anything I want?

Mr. CROSLEY. You can.

Representative BLOOM. Then, the same right would apply to the individual as it does now to the society.

Mr. CROSLEY. But here is a collection of them that is large enough to control the whole situation and make any demand upon us that they want.

Representative BLOOM. Can not I as an individual make the same

demand?

Mr. CROSLEY. Yes; but then we can go elsewhere and buy.

Representative LANHAM. If we were to assume price-fixing was the proper policy with respect to this bill, have you come to any conclusion as to what would be a proper price to fix for stations in these various classifications?

Mr. CROSLEY. No, sir. My mind is entirely open on that. I can see it as the only solution, but I am not so much interested in the price per number. If the price per number is too high we can not pay as much and the royalties resulting therefrom will not be as great. On the other hand, I think that is a matter that can be fully decided. It is the principle that I am speaking for.

Representative LANHAM. But we have a bill here with the amount left blank; that is, respecting the amount for various stations, etc. Of course, if the committee should decide to adopt this policy of price fixing it would have to have some information upon which to predicate its conclusion.

Mr. CROSLEY. I was not asked to speak on that subject. It is out of my domain and I only say that I have no interest in that. Representative LANHAM. Some one will, however, address himself to that question?

Mr. CROSLEY. I believe. so, yes.