that Congress was concerned with the avoidance of future tendencies toward monopolistic and restrictive practices, not merely the particular contracts of one music roll manufacturer. If the Aeolian Company's existing contracts had been its only concern, Congress need not have written the compulsory license clauses to cover "disks, rolls, bands, or cylinders for use in mechanical music-producing machines"; there is no doubt of the fact that Congress intended to cover phonograph records and all other forms of "interchangeable parts," even though the only specific monopoly problem that existed at the time was limited to perforated piano rolls. In other words, Congress chose to establish a system that would make it impossible for monopolies to arise in the field of mechanical reproduction devices of any kind.

If the Register's statements about hundreds of competing record companies prove anything, they prove the wisdom of Congress in 1909. There assuredly is no guarantee that the danger of concentration and monopoly would not reappear if the statutory license system now were to be eliminated.

We shall deal in the succeeding section with the monopoly problems we fear might be created by a repeal of the statutory license provisions. For present purposes, we simply point out that this argument proceeds from a false premise. The substitution of hundreds of competing record manufacturers for one dominant piano roll manufacturer with exclusive contracts tying up the leading music publishers does not mean that the monopoly problem that faced Congress in 1909 may not appear in even more threatening form if the statutory license is removed from the Act.46

6. The Consequences of the Elimination of the Compulsory License System.

The published predictions by critics of the statutory license system about what would happen if it were eliminated are so diverse and inconsistent that they lead to two possible conclusions: (1) that vast changes in the structure and operation of the phonograph record industry are inevitable; and (2) that non-exclusive licenses would be granted freely so that record manufacturers (at least the reputable ones) have nothing to fear from repeal of the statutory license provisions except

possibly a rise in royalty rates. As to item (1), no evidence has been presented sufficient to justify taking a step that would cause a drastic upheaval in the record industry; as to item (2), if no substantial change in practical operations is to be made, there certainly is no justification for eliminating the statutory license system.

In his Report, the Register attempts to deal with both of these alternatives. The Report first prophesies, "It seems likely that in the absence of the compulsory license, multiple recordings would still be licensed nonexclusively."'47 47 Under these circumstances, the Report again prophesies, everything would remain much as it is today, with benefits flowing to the public (from a variety of recordings of any particular musical work); to the small record companies (from the opportunity to produce their own versions of the same music offered by large competing manufacturers); and to the authors and publishers (from the increased royalty revenue derived as the result of giving their works public exposure through several different recordings).48 Aside from the question of what royalty rate the traffic would bear, the only differences the Report can find between these circumstances and the present statutory license system are that "the author or publisher could refuse a license to a recorder whom he considered irresponsible or for a recording he considered undesirable." These are the same problems dealt with as Items "b" and "c" of Section 5, above, where we pointed out that they are readily capable of solution without destroying the entire statutory license system in the process. It also must be obvious that these problems are the exceptions and not the rule. Treating these special cases by repealing the statutory license clauses in their entirety is reminiscent of the old cliché about throwing out the baby with the bath water.

The Register's Report also takes up the possibility that "removal of the compulsory license would result in the granting of exclusive licenses," indicating that loss of the "benefits flowing from multiple recordings would be offset by other considerations.'' The striking feature of the presentation which follows this statement in the Report is that it deals solely with the ephemeral popular "hit." Accordingly, even if the discussion were accurate in other respects (it is based largely on unsupported assumptions), this portion of the Report would

be unacceptable as justification for scrapping the statutory license system because it ignores the vast body of musical works that have more enduring value than the "hit" which appears on the best-seller lists for a few weeks and then disappears-possibly forever. We do not speak only of serious music of the type that is performed in the concert hall; in addition, there is a wealth of music in the category the industry calls "standard"—for instance, such hardy perennials as "Stardust" and "White Christmas"—and the show tunes that are played and recorded over and over again, such as the songs from "Show Boat," "Oklahoma!," "South Pacific" and "My Fair Lady." No discussion of hypothetical future circumstances in the record industry can have any validity when it ignores this tremendous reservoir of copyrighted musical compositions.

One statement in the Report requires specific mention because it reads superficially as if it might have some merit although in fact it is completely erroneous. The Register states, "Many hits are now originated by small companies; and their prospective hits are often smothered by records of the same music brought out by larger companies having better known performers and greater promotional facilities." Nowhere in the Report or in the Revision Studies is there any supporting evidence for this statement. It requires only a glance at the best-seller lists discussed in Section 4, above, to see the strong representation of small companies among those who produce the popular hits. Unfortunately, the quoted statement is typical of the inaccurate impressions created by this portion of the Report, which is replete with such expressions as "we understand," "we believe" and "probably.'”

One thing that seems clear to the Register according to his Report is that "present practices in the record industry are based on the compulsory license," and hence that "its elimination would require some major adjustments and new contractual relationships.""53 (As we have shown, this is a gross understatement.) Accordingly, as part of the proposal to eliminate the compulsory license provisions, the Report makes the following recommendation:54

"Since elimination of the compulsory license would require negotiations between music publishers and record companies to make new contractual arrangements as to royalty rates, etc., we pro

pose that the present compulsory license provisions be left in effect for one year after the enactment of the new law."

This statement apparently envisages some kind of group approach to the practical economic problems that would be created by the proposed elimination of the compulsory license system, with associations of music publishers and record manufacturers bargaining out a collective agreement along the lines of the BIEM contract that fixes royalty rates and other terms for the phonograph record industry in many foreign countries. There are at least two reasons why no such procedure could work in this country. First, there are so many different music publishers and so many different record manufacturers in the United States that unanimity on either side cannot be considered a reasonable possibility. Second, any such procedure would invite scrutiny under the Sherman Antitrust Act;55 it might subject the record industry to possible civil and criminal antitrust proceedings, and to innumerable private treble damage suits such as have plagued the motion picture industry as an aftermath of the Paramount case.56

If we read this portion of the Register's Report correctly, it is startling to see the extent to which it has followed the line of the music publishing interests, including their apparent oblivious disregard of the differences between European and American legal systems in terms of antitrust requirements. For example, Ralph S. Peer, late head of an important multi-company music publishing enterprise with headquarters in New York, wrote in his published comments on one of the Revision Studies:57

"Actually, we do not need to guess about what would happen if copyright owners were freed from all restrictions as to mechanical rights. That is the situation existing today on the European Continent. Furthermore, the [European] copyright owners are not restrained by antitrust laws nor the limitations of fair trade [sic] acts. We find existing on the Continent the Bureau International de l'Edition Mecanique [BIEM] which in effect has a monopoly in the field of mechanical rights. It can grant exclusive rights or charge any amount which it likes subject to certain limited restrictions, as in Germany."

See Section 9, below.

Another comment from Mr. Peer, dated a few weeks later than the one quoted above, includes the following revealing glimpse of what the copyright proprietors expect to happen if the statutory license system is eliminated from the United States Copyright Act:58

"Recently, I had lunch in Paris with the head of BIEM. It is his business to collect maximum possible amounts for mechanical use of music in all continental countries. None of the difficulties envisioned by the framers of our 1909 act have risen to the surface in Europe. Every 2 years there are, meetings between BIEM and the international organization representing the recording industry. A mutually satisfactory contract has been in existence for a number of years, and there are no insurmountable difficulties on the horizon."

The approach for which at least some music publishers contend and which the Register apparently supports is revealed even more clearly in a recent article by the Director-General of SACEM, the French performing rights society, containing his comments on the Register's Report. It is noteworthy for its cavalier attitude toward the role of antitrust enforcement in the American economy. The article states:59

'Assuming the compulsory license for sound recordings of music disappears in the prospective legislation, it will be a near necessity for authors and publishers to team up and face the formidable power of the record industry with professional organizations comparable to public performance societies. If such organizations become paralyzed by two or three 'consent decrees,' as ASCAP is for example, the result to copyright owners might be worse in its effects than the present compulsory license."

It becomes evident that the desire of music publishers to obtain exclusive rights controlling the mechanical reproduction of music is not primarily for the purpose of issuing exclusive licenses. Indeed, Ralph Peer tells us that, "In the entire world there are now no instances of copyright owners granting exclusive licenses for commercial records.'' What may be anticipated is an attempt to substitute a cartel system for the statutory license system. If such an attempt should be made, then the proposed repeal of the compulsory license