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Mr. Hearst the exclusive right to use the telegraph lines for the dissemination of news.
Again, drawing an analogy from the patent law, it seems to me that the position of the composer in this matter would be like that of a patentee, who, having sold a patented shoemaking machine and received his price therefor, should claim that he had a right to a part of my profits in the use of the machine. It seems to me that the copyright proprietor should have no more protection than the patentee. He can do everything that the patentee does. If he is not making money enough out of his compositions he can sell them at the very highest price the public will pay, and he can sell them subject to such reasonable and fair conditions as he may choose to impose. If a thing is patented, and there is a demand for it, the patentee gets the highest price possible.
It seems to me that when we go that far we go as far as we should go. If this bill is passed a weapon is put into the hands of the copyright proprietor by which the public will be oppressed and his competitors harassed and possibly put out of business.
Mr. SOUSA. I understand you to state that the pay roll of the Edison Company is $45,000 a week.
Mr. DYER. That is what I have been informed.
Mr. SOUSA. Do you know whether there are any composers or that pay roll?
Mr. DYER. I do not know anything about that.
Mr. HINSHAW. If a dramatic production is copyrighted, the copyright owner can prevent its production without the payment of tribute, can he not?
Mr. DYER. That depends upon the question as to whether the statute is constitutional or unconstitutional.
Mr. HINSHAW. Wherein does this proposition to prevent the production by machines of a musical composition differ from the production of a drama?
Mr. DYER. I think that if they would recognize the Constitution, and if they looked to the meaning of the word "writing" as defined by the Supreme Court, they would not permit a drama to be included in the word" writing." I am free to say that I think it a very doubtful question whether a dramatic performance can be constitutionally protected; but the question does not seem to have been decided by the Supreme Court. I do know, however, that many dramatic authors do restrict their copyrighted plays, and that those copyrighted plays can not be performed unless you pay $75 to Mr. Charles Frohman, for instance. I know that has been done in connection with a small dramatic club, which wanted to produce a copyrighted play.
Mr. HINSHAW. And the question as to the constitutionality of that has never been decided?
Mr. DYER. It has never been decided.
Mr. BURKAN. May I ask you a question?
Mr. DYER. Yes, sir.
Mr. BURKAN. Do you remember this doctrine, laid down in the case of Bobbs-Merrill Company v. Strauss (139 Fed. Rep.), to this
There is no sanction or support whatever to the doctrine that the several owners of distinct patents, each having a monopoly of its particular patent, or the several owners of distinct copyrights, each having a monopoly of his
particular copyright, may combine and conspire as to their patented articles or as to their copyrights or books published under a contract thereby to restrain interstate commerce in articles made or produced thereunder. The right or privilege to form such a combination or conspiracy is not embraced or included within the monopoly granted.
Is that the law?
Mr. DYER. I have no doubt about that. nat is a Supreme Court decision.
Mr. BOWKER. I would like to ask you one or two questions. Did Mr. Edison name the phonograph?
Mr. DYER. I don't know about that. I think it is very doubtful. Mr. Edison is not a man of a classical education.
Mr. BOWKER. What does the word "phonograph" mean, literally? Mr. DYER. I should say it meant "sound writer."
Mr. BOWKER. And graphophone means the same thing?
Mr. DYER. They claim that there is a difference.
Mr. BOWKER. It means the same thing, "sound writing," does it not?
Mr. DYER. Yes.
Mr. BOWKER. Have you happened to hear mention made of the Edison dinner, and of verses composed by me?
Mr. DYER. No; I did not.
Mr. BowKER. Were you not at the dinner?
Mr. DYER. I was not there.
Mr. BowKER. The fact is that those verses were recorded by my voice and nothing else. The nerves of my brain directed the vocal organs instead of the hand. Was not that literally a writing by myself?
Mr. DYER. No; I don't think so; as I understand the Constitution. I do not think that was a writing which the framers of the Constitution had in mind. However, I have made my argument and you can make your reply to it.
Mr. BowKER. Is it not true that the operation of my brain was simply going through the nerves of the voice instead of through the nerves of the hand?
Mr. DYER. Yes.
Mr. BOWKER. And was making a record on that roll, just the same as any record is made from other records?
Mr. DYER. Yes.
Mr. BOWKER. And that intellectual product existed nowhere else at that time.
Mr. DYER. But we are dealing here not with literary compositions, but with musical compositions. I have made the distinction, which I hope I have made clear.
Mr. BOWKER. You said the business of the Edison Phonograph Company would be ruined in case this law passed. In the first place, is it not true that you make two different kinds of talking machines?
Mr. DYER. Not we do not.
Mr. BOWKER. Excuse me, but the district manager of the phonograph company was in my office last week with what is called a commercial machine, which is used as a substitute for stenographers. I wanted a machine which would reproduce music and could be used commercially, and he specifically told me that no machine made was
calculated to do both; that one worked at 120 and the other at 160 revolutions a minute. I repeated these verses to a commercial phonograph, which is used for commercial purposes only. So it is scarcely true that the business would be ruined.
Mr. DYER. I think the business would be substantially ruined if we were not able to get hold of the current publications of music. Mr. WALKER. I am requested to announce that the next speaker on our part is Mr. Pound.
The CHAIRMAN. Before Mr. Pound begins, I understand that Mr. Cutter desires to correct, in the record, a statement he has made.
Mr. CUTTER. I wish to correct a statement I made in regard to à decision as to the legality of the notice in the front of the book, which I submitted. I find, upon consulting the case upon which I relied, that the form of notice relied upon in that case was different from the form of notice in this book. The notice in this book which I have presented claims property in the article if the contract is not fulfilled. That was not in the notice in the case to which I have made reference.
STATEMENT OF GEORGE W. POUND, OF BUFFALO, N. Y., REPRESENTING THE DE KLEIST MUSICAL INSTRUMENT MANUFACTURING COMPANY, OF NORTH TONAWANDA, N. Y.; RUDOLPH WURLITZER COMPANY, OF CINCINNATI, OHIO.
Mr. POUND. Mr. Chairman and gentlemen of the committee, I believe, in opening, that it is proper to pay tribute to the occasion which has brought us here. I think these hearings are great educators, and I believe they do much for the business interests represented here. They enable us all to depart with better ideas of one another, and with broader ideas as to the business activity of our country. We have 85,000,000 people, and naturally there are largely diversified interests-burning questions, keen debate, great interests trying to vindicate their right to be; these are the people's schools. These public hearings which you give us, in this way, are schools for our information and education.
I had intended to address myself more than I shall to the constitutional features of this bill; but I am somewhat impressed with the belief that possibly you have heard along that line about all that you wish to hear. I believe the bill to be absolutely unconstitutional. If passed, that will be the opinion of our firm and that will be our advice to our clients.
The CHAIRMAN. I understand that you are speaking to subsection g.
Mr. POUND. Yes, sir; that and its dependents. I desire to call the attention of the committee more particularly to the reason why we are here. We are here upon the same theory that our friend Mr. Sousa is here, who seems to be the only one of these composers who takes very much interest in this matter. It seems to me that the Musical Publishers' Association ought not to come here and say that they appear for the composers-that is a strange anomaly-rather than that he alone should appear.
I intend to exhibit to you a contract, and I believe I can convince you not only that there is some liability of a monopoly being created under this contract if you pass this bill, but that a monopoly now
actually exists beyond peradventure. I will direct your attention to the fact that the Eolian Company has got a number of these contracts. My friend Mr. Bowers said last night that they had a bushel of them. The one which I produce to you now is one which I believe you have not yet seen, and it is headed "Manufacturers' Sixty Per Cent Contract." In addition to this they have their "Publishers' Contract."
I am going to direct your attention to some of the principal provisions of this contract, which was presented to my client on or about the 1st of March last. It bears date in 1906.
Paragraph 4 says:
(4) Upon such orders as shall be sent to the company by the buyer's manufacturer or dealer, provided such manufacturer or dealer handles exclusively the players, or player pianos, or parts thereof made by the buyer, then the company shall fill such orders direct and bill to the buyer, and the company reserves the right to solicit orders for itself from the manufacturer or dealer direct, excepting the dealer who handles exclusively the players or player piano actions therefor, made by the buyer, excepting players or player pianos which take a roll not made by the company.
The word "manufacturer" under this contract refers to a piano or player maker who shall purchase player actions from the buyer, and the word "dealer" under this contract refers to a retail piano or music dealer who exclusively markets to the consumer.
Paragraph 6 says:
(6) To sell to the buyer such music rolls as are covered herein which he shall order, and bill the same to the buyer at 60 per cent discount from the catalogue prices current at this date and subject to a further rebate on annual purchases as follows:
A rebate of 10 per cent if not less than 25,000 rolls are purchased and paid for in one year.
A rebate of 25 per cent if not less than 100,000 or more rolls are purchased for in any one year.
A rebate of 25 per cent if not less than 100,000 or more rolls are purchased and paid for in any one year.
In case said buyer purchases 2,500 rolls in any month, he may retain 10 per cent of the purchase price thereof; in case said buyer purchase 4,500 rolls in any months he may retain 15 per cent of the purchase price thereof; in case said buyer purchase 6,500 rolls per month he may retain 20 per cent of the purchase price thereof; in case said buyer purchase 8,500 rolls per month, he may retain 25 per cent of the purchase price thereof; it being understood, however, that the buyer may retain the amount of but one of those percentages during each month. At the end of each year the amounts so retained shall be applied on account of the rebate to which the buyer shall then be entitled, but if said buyer shall not be entitled to any rebate, or said rebate does not amount to the amounts so retained, any balance so retained shall forthwith be due and payable by said buyer to said company.
The second general subdivision of the contract provides that the buyer will not purchase for his own use, or for sale directly or indirectly, or through his branches, any perforated music rolls except those manufactured by the company, and that he will not offer for sale, sell or deal in, directly or through his branches, any perforated music rolls except those manufactured by the company.
The next paragraph contains a provision that the buyer will cooperate with the company in order to induce his manufacturers and dealers to purchase only such perforated music rolls as are manufactured by the company, and to endeavor to induce such manufacturer or dealer to sign an agreement to that effect, and should the manufacturer or dealer at any time decline to handle the company's rolls
exclusively, excepting rolls of the size and style which the company does not make, and provided further the said manufacturer or dealer shall not at all times maintain the prices on the new rolls covered by this agreement then the company shall have the right to demand that the buyer discontinue the sale of such rolls to such manufacturer or dealer without violating this contract.
Section 4 of this same subdivision binds him not to engage in any way in the manufacture of perforated music rolls, either directly or indirectly.
The next paragraph binds him to maintain the prices of the Eolian Company.
But in paragraph 5 of the third subdivision is found the main gist of this contract.
It is expressly understood and agreed that if perforated music is made the subject of copyright by statute, or it is adjudged by any trial or appellate court to be the subject of a copyright, then in either or both of these events the company may, at its option, at any time, and as often as is necessary, increase the price thereof, so as to cover royalties paid by the company, including expenses of accounting therefor. All other expenses incurred by reason of copyright by any increase as above shall likewise operate as to all contracts similar to this one with other parties.
Mr. GEORGE HAVEN PUTNAM. What is the date of that contract? Mr. POUND. It is dated the 1906. It was presented to our client on or about the 1st day of March, 1906. Mr. HINSHAW. Do you know whether any of those contracts have been executed?
Mr. POUND. I am informed by the representative of the Eolian Company that they have many of them.
Mr. WALKER. Your company simply refused to make that contract?
Mr. POUND. Our company refused to make any contract whatsoever with the Eolian Company.
Mr. WALKER. That was the contract they wanted.
Mr. POUND. This was the contract which was submitted by Mr. Tremaine, of the Eolian Company, their vice-president, I believe, to my client.
Mr. WALKER. And you were told that they had a very large number of these contracts already executed?
Mr. POUND. As it was expressed to me, that they had a bushel of them.
Then, they had a separate agreement from this contract, going further than this contract does, to be executed by the dealer and not by them, in which he covenants that he will not cut their price, that he will always maintain their price, and that he will not handle, for sale or otherwise, perforated rolls other than those made by this
Now, gentlemen, in the light of that contract, when they have got practically all the large publishing houses of this country tied up, when they have got the manufacturers of paper rolls tied up like this, if it does not create a monopoly, what is a monopoly?
Mr. TINDALE. I can say to you right now that it does not exist among the publishers. It may exist among small dealers.
Mr. POUND. No; that statement is not true. It does exist. It absolutely exists. Has there been any denial by any representative of