$5,000 per infringement-unless willful, in which case the $5,000 limit is removed. The copyright user's responsibility of obtaining prior authorization to publicly perform a musical composition is buttressed by this statutory penalty. In short, the weightiness of the statutory damage provision is what causes the music user to discipline himself by obtaining the required prior authorization. We feel that any diminution of the user's incentive to police himself will increase the copyright proprietor's difficulties in enforcing his rights. Section 640 (c) (2) allows the court discretion to reduce the award of statutory damages to a sum of not less than $100 in cases where the infringer sustains the burden of proving his innocence as an infringer. The lowering of statutory damages in the case of innocent infringers will, we feel, tend to vitiate a user's incentive to get prior performance clearance. We would recommend that the original $250 statutory damage provision remain as the penalty in all situations.

Moreover, we find in S. 597 an exemption for certain performances which impose limitations on the copyright owner which do not exist. under the present status of the law. I am referring specifically to section 110(5) which will allow a hotel, tavern, or other public establishment to utilize a home receiving apparatus, such as a radio or television set, in its public areas-for example, its lounges, bars, and lobbies as long as there is no direct charge to the customer and there is no further transmission to the public.

At present, there is a legal basis established in separate cases involving both Sesac and ASCAP during the thirties for issuing a performance license to a hotel or other similar establishment where copyrighted music is presented through a non-coin-operated radio or television set located in either the public areas or private rooms of such an establishment. (Buck v. Jewell-LaSalle Realty Co. 283, U.S. 191, 9 U.S.P.Q. 17 (1931); Sesac Inc. v. New York Hotel Statler Co., 19 F. Supp. 1, 34 U.S.P.Q 6 (1937).

Of greater importance than the modification of our presently established law in this area, this exemption may, in due time, by virtue of certain advancements in technology and science create an anomaly in the future, analogous to the present anomaly which exists with regard to the jukebox exemption in our 1909 statute.

Just as the present status of jukeboxes was not and possibly could not have been foreseen when the 1909 statute was enacted, the exemption in section 110(5) of the bill presently under consideration may in the future cause unforeseen and unanticipated hardship to the copyright owner.

Since Sesac is primarily a music porformance rights licensing organization, I have heretofore limited my remarks to the areas in the pending bill pertaining to the performance right granted to the copyright owner.

Since, however, Sesac also represents our affiliated publishers and organizations in the area of licensing phonorecords, I would like to briefly mention our position with regard to the royalty payable under the compulsory licensing provision in the present bill, which is section

115.

We feel a 3-cent royalty as originally provided for in H.R. 4347 represents the minimum terms upon which a copyright owner should be asked to compromise his exclusive right to issue phonorecord

licenses. We are virtually certain that this committee will hear testimony on why the increase of this rate from 2 to 3 cents in economically unacceptable and even morally unjustified in the eyes of the phonorecord industry. In reply, we simply urge this committee to remember that the 2-cent rate has been in existence since 1909. We truly believe that this fact speaks for itself and speaks in favor of an increase in that rate to at least 3 cents.

In closing, may I point out that I have not touched upon the issue of Community Antenna Television Systems since this matter was amply covered in my prior testimony before this subcommittee last August. We would hope that this committee would give its favorable consideration to the suggestions which we made to it both on the CATV issue last year and on the various issues highlighted by me today and we thank you very much for allowing us the time to set forth our views. Senator BURDICK. Thank you very much.

The next group will be the National Music Publishers' Association, Mr. Feist and Mr. Rose.

STATEMENT OF LEONARD FEIST ON BEHALF OF THE NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.; ACCOMPANIED BY WESLEY ROSE, MEMBER AND DIRECTOR OF THE NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.

Mr. FEIST. Mr. Chairman, I am Leonard Feist. I am accompanied by Mr. Wesley Rose, a member and a director of our association.

I am the executive secretary of the National Music Publishers' Association, the trade association of popular music publishers. Our association was founded in 1917 as the Music Publishers' Protective Association and included in its membership then, as now, the leading firms in the field.

In testifying on S. 597, I would first like to salute the dedicated work of the Register of Copyrights and his most able colleagues, together with the painstaking, exhaustive, and patient concentration of Subcommittee No. 3 of the House Judiciary Committee. For bringing this legislation to its present point, they, together with this committee, merit the highest praise of all concerned with the encouragement of creativity and the protection of literary and musical property.

The National Music Publishers' Association views revision of the antiquated copyright law with enthusiasm and hope. In general, we believe that most of the provisions of the bill before you are fair and equitable to the music creator, the publisher, the user, and importantly, to the public.

There are, however, certain very important provisions in S. 597 which we believe still leave the scales unbalanced against the writer and publisher. We urge you to reconsider these provisions of the bill so that the law, as finally enacted, may more equitably recognize certain fundamental rights of writers and their publishers, who essentially have mutually common interests in this bill.

Mr. Chairman, since time is of the essence and since my statement is rather long, I will skip through it and give the highlights.

Senator BURDICK. We welcome that suggestion. Without objection, the entire statement will be part of the record.

Mr. FEIST. With reference to section 107, our association is in full agreement with the point of view which will be presented later today by the Music Publishers' Association of the United States.

As to the jukebox provisions of S. 597, we endorse and subscribe to the position of ASCAP and BMI, as we do, indeed, to their testimony on secondary transmission, CATV, as previously presented and possibly presented at a later date.

Let me now turn to another area of the bill which is of the utmost, of vital concern to the music publishing industry. And let me preface my remarks by suggesting a hypothetical situation.

Let us suppose, Mr. Chairman, that a private industry, motivated by profit, made the following request of your committee during the course of these hearings. And I quote "Let our industry, composed of hundreds of active firms, have free access to a certain immense area of copyrighted material, to all copyrighted material in this category. Of course, we would pay for its use, and we suggest that a modest royalty rate be established in this law which would represent the highest royalty which we would have to pay. Now we don't want to be bound to pay that rate all the time and to be prohibited from negotiating below it. It would be the top, the ceiling. We want you to know that we operate in the public interest in spreading culture and serving education although we aren't under any compulsion to do so." End of fictional quote.

By way of example, Mr. Chairman, I would like to suggest, per haps, the publishers of paper back books seeking such a provision in the bill with reference to publishers of literary materials.

I will not presume to suggest how the Congress would react to such a proposal, such a self-serving request from a private industry. I place the thought before you with the hope that it will bring the entire issue of compulsory licensing of recordings and the resultant statutory royalty into a clearer focus. I ask you to think of it as if it never existed, as if you were being asked for the first time to introduce such an outlandish concept into the new copyright law.

We are all aware that there were special circumstances which led to the initial introduction of this provision into the law in 1909. Once enacted, it quickly accomplished its purpose and should have been promptly repealed. Efforts were, indeed, made frequently over the years to accomplish this, but without success. And so this unique and long outworn provision is maintained in the bill before you.

The record industry has claimed that if the benevolent permissiveness and privilege of the compulsory licensing provision were removed from the law, they would be at the mercy of publishers in negotiation. This is simply not true. This point will be discussed further by the distinguished economist, Robert R. Nathan, when he presents his independent analysis later this afternoon.

Music publishers are rugged, creative individualists. They must be able, flexible businessmen to succeed in a highly competitive business where fierce competition exists between hundreds of these rugged, creative realists and thousands upon thousands of songs.

What the compulsory license has done has been to inhibit the development of a free, realistic arrangement between publisher and record company. It has created an artifical situation. Record companies

without the benefit of a legal advantage bargain for, or buy at the market price, everything that goes into their product except the essential ingredient, the product that makes that very industry possible. They have indeed been an uniquely fortunate industry to have the vast repertory of music available to them at a fixed maximum rate-all the copyrighted music in the world-something beyond price, something that represents so many thousands of lifetimes of creativity by songwriters, so many hundreds of lifetimes of energetic promotion by publishers-genius and determination, vision and vigor. The entire heritage of the world's musical creativity is theirs without even asking— theirs for the taking at an arbitrary bargain ceiling rate.

It might be said that if compulsory license were eliminated, there would be disruption in our industries. I need hardly say that if such prove to be the case, as I think it would not, our industry would, of course, cooperate in every way to assure that the transition be a gradual

and smooth one.

If, however, the Congress determines that compulsory licensing must be retained, then we believe that in simple justice the statutory rate must be raised, not a little, but realistically.

In an effort to becloud and confuse the issue of what the royalty rate should be, the record industry has previously testified before the House subcommittee that the music publisher does nothing, that they, the record producers, popularize songs entirely on their own.

Mr. Wesley Rose, one of our leading publishers, will negate this in a few moments from his own personal experience.

A very effective description of the role and activities of the modern music publisher has appeared in "The Business and Law of Music" published by Federal Law Publications in 1965. It was written by Mr. Leon J. Brettler, a director and secretary of our association and a music publisher with broad experience. It is attached to my statement and I request your permission to have it included in the record.

The record industry testified before the House subcommittee as though all songs were the same and were of minor importance and that records have always played the leading role in creating successful songs. We have admitted, and must admit, that they are and have been in recent years highly important in introducting new songs. But they must admit that publishers bring most of these songs to them and that songs do not appear out of the blue-or from their own subsidiary music publishing companies. They must admit, too, that the majority of songs which are recorded are used in albums and that approximately 75 percent of these songs are long established successes and that most of them were made popular by the publisher through other means of exposure and performance at great expenses to the publisher long before the current record boom. The record industry witnesses stretched the point almost to breaking when they claimed, by implication, that the tremendous number of important songs included in albums have been created mainly by and through them.

In their prior testimony, the record industry has represented that theirs is a low average of profitability. They portray themselves as weak economic units which must have the benefit and protection of a

benevolent law. They know as we know that there are many record companies which are skillfully and energetically managed and which consistently make a handsome profit.

I will skip this part of my testimony, since Mr. Nathan will comment later, though on a different basis than I have.

Earlier I stated that if the Congress determines on balance that there is reason for the retention of the compulsory licensing provision, then the statutory royalty ceiling should be increased realistically. The House Judiciary Committee has recognized that an increase is justified and warranted. But we submit that in decreasing the original proposal of 3 cents to only 2 cents, there has been only token recognition of this.

When our industry acquiesced to the 3-cent ceiling as originally proposed in the 1965 bills, we did so to keep this matter out of the area of controversy and to speed up the enactment of the legislation of which this is only a single component-vital though it may be to music publishers. We felt that the proposed ceiling of 3 cents, although too low in our opinion, would at least provide an acceptable compromise and some room for broader negotiation between ourselves and the record industry so that a true economic level might be found within it by bargaining. The House committee has made an unreasonable compromise of what we felt was a reasonable one.

We testified in favor of the 3-cent ceiling with sincerity and commitment. We believed without reservation that all parties were agreed to it. To our amazement, the record industry launched a vehement attack-and undoubtedly will attack the proposed 22 cents when they appear here tomorrow.

Had we been aware in advance of their vigorous assault, we would have reexamined our position before appearing before the House subcommittee. We have done so since.

We believe with conviction and sincerity and could argue with validity that 3 cents is too low, particularly in view of the fact that the new copyright statute will be in effect for decades to come, decades during which dynamic changes will take place within the music business. We contend that this is a ceiling and as such should only provide a possible price at which licenses can be obtained when all negotiations have failed.

We believe that, in this context, a ceiling of 4 cents is not unrealistic. We would agree here and now to the proposed ceiling of 22 cents if there were an increase of 0.5 cent per year until the ceiling reached 4 cents so that the new ceiling would be reached gradually.

We urge that, under any circumstances, a provision be written into the law to provide that the established statutory royalty be subject to reexamination at periodic intervals.

We would like to point out to the committee that any figure written into the law will be an arbitrary one. We are convinced that the committee, after evaluating all the testimony, will find that a higher rather than a lower ceiling is the equitable-the just and wise conclusion.

Thank you, Mr. Chairman, for the opportunity of appearing before this committee and presenting this testimony. I trust that it will have