CBS CBS Inc., 51 West 52 Street Harry R. Olsson, Jr., General Attorney Re: United States Adherence to the Berne Convention Dear Senator Mathias: June 11, 1986 As a follow-up to my April 15, 1986 testimony supporting United States adherence to the Berne Convention, you sent me two questions with your letter of May 21st. Noting that it is obvious that I cannot speak for all those in my field, you ask whether American broadcasters generally support adherence to Berne, and whether our trade associations have taken a position on the question. In terms of individual broadcast entities, I am unaware of any position taken except for NBC and CBS, both with important international copyright concerns. They support adherence. The National Association of Broadcasters as yet has taken no position on Berne. The subject has been discussed at meetings of the Copyright Committee, of which I am a member. At the meetings, while questions have been asked, no opposition to Berne has been expressed. Due to pressing domestic concerns affecting the industry, the consideration of this comparatively arcane subject has, unfortunately, not been concluded -- but not because of any active opposition. I expect and hope that the matter will move along more quickly now, in part because of your subcommittee's interest. Secondly, you ask me to explain any incompatibility between compulsory licensing for public broadcasting and Berne, and how I see it being resolved. Section 118 of the Copyright Act of 1976 contains a compulsory license with respect to published nondramatic musical works and pictorial, graphic and sculptural works for public broadcasters both to perform or display (broadcasting) such works in the course of their transmissions and, to produce those programs for such transmissions, reproducing such works in the course of doing so. Article 11 bis (1) of Berne requires that authors of literary and artistic works shall enjoy the exclusive right of authorizing "the broadcasting of their works...." but Article 11 bis (2) of Berne allows compulsory licensing of the right providing the author has a right to obtain "equitable renumeration which, in the absence of agreement, shall be fixed by competent authority." Quite clearly, our present law which directs in section 801 that the Copyright Royalty Tribunal shall make determinations as to reasonable terms and rates of royalty payments, meets Berne's requirement of equitable-renumeration-fixed-by-competentauthority for a broadcasting compulsory license. Article 9(1) of Berne requires that authors of literary and artistic works "shall have the exclusive right of authorizing the reproduction of these works, in any manner or form." However, Article 9(2) provides that "It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with the normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author." It appears to me that public broadcasting, when reproducing published nondramatic musical works or pictorial, graphic or sculptural works in ancillary connection with its permitted broadcasting of such works, can be justified as an instance of the "certain special cases" envisioned by Article 9(2). Certainly in this country our government, laws and regulations regard and treat public broadcasting as something quite special. If that be so, so long as it is, the compulsory-licensed reproduction of such works for such use neither conflicts with the normal exploitation of the work nor unreasonably prejudices the legitimate interests of the author of it. I believe our present law in this respect is compatible with the requirements of Berne. I understand that the argument has been made that Article 9(2)'s language "to permit the reproduction" cannot include doing so on condition of securing a compulsory license, but I see no valid basis for the argument. You also asked for any comments I might have on the draft of implementing legislation prepared by the Copyright Office. Unfortunately, available time has not permitted me to give this matter all of the attention it needs and deserves nor to determine whether my views coincide with those of CBS. However, permit me several observations which I believe would survive attention. The Congress should declare Berne to be not self-executing. The law should go no further in its application of moral rights than it now does. Lastly, as I testifed on April 15th, the manufacturing clause should be allowed to expire. Dirksen Senate Office Building First Street and Constitution Avenue, N.W. Senator MATHIAS. Thank you very much, Mr. Olsson. STATEMENT OF ELROY WOLFF Mr. WOLFF. Good morning, Mr Chairman. I am Elroy Wolff, representing the Amusement & Music Operators Association. AMOA is the trade association for the jukebox industry, Mr. Mathias. We would like to make four main points in summary of our prepared statement. First, the jukebox industry is in decline, and has been for several years. In 1976, approximately 20,000 jukeboxes were sold in the United States. Sales for 1983 totaled just over half of that, a little under 12,000. Senator MATHIAS. These are new jukeboxes? Mr. WOLFF. Yes, Senator. The second measure of that decline is, in 1973, sales of 45-RPM records, of which the industry is by far the major purchaser, totaled 228 million. In 1983, only 125 million 45-RPM records were sold. In 1978, in the United States, there were approximately 143,000 licensed jukeboxes. In 1985, there were less than 100,000. So this is very clearly an industry that is in decline and that is suffering decline in its profit margins and its general economic condition. Any increase in the costs that the industry experiences will only aggravate that decline. Second, elimination of the existing compulsory license for jukeboxes will inevitably result in increased costs to the industry. In addition, it will result in a decline in revenues to copyright owners. Obviously, if there is less of a jukebox industry, there is going to be less money going back to copyright owners in the form of royalties. That is certainly not beneficial to copyright owners or the industry. Third, there have been some suggestions here this morning with regard to a so-called two-tier system. We do not believe that a twotier system is practical. We do not think it will be effective. The natural consequence of a two-tier system appears to the jukebox industry to be that the owners of foreign copyrights probably will not have their works used in this country, or will be used to a much lesser extent, again not to their benefit by any means. Finally, as our last main point, I am very troubled to hear people learned in constitutional law, international law, and copyright law debating here this morning the consequences of U.S. adherence to Berne. I have nothing to offer on that, except to say that it should not be left in a state of uncertainty. To be sure, as far as the compulsory license is concerned, we urge that whatever the outcome is with regard to U.S. accession to Berne that the compulsory jukebox license mechanism be retained, and that whatever mechanism is used for accession to Berne, the Congress make clear that there is no intention to eliminate the compulsory jukebox license. [Mr. Wolff's submissions for the record follow:] STATEMENT OF THE AMUSEMENT AND MUSIC OPERATORS ASSOCIATION Good Morning, Mr. Chairman, Members of the Subcommittee. I am Elroy Wolff, representing the Amusement and Music Operators Association (AMOA). I am accompanied by AMOA's Washington representative, Mark Griffiths. We appreciate this opportunity to testify on the question of United States adherence to the Berne Convention For The Protection of Literary and Artistic Works. AMOA's 1600 members own over half of the jukeboxes in the United States. AMOA has represented its members for many years on copyright issues, and actively participated in the legislative process that led to revision of the United States Copyright Act in 1976. Subsequently, AMOA has negotiated with the performing rights organizations ASCAP, BMI and SESAC with regard to several aspects of the jukebox compulsory license provided for in Section 116 of the Copyright Act of 1976. Earlier this year, the Ad Hoc Working Group on United States Adherence to the Berne Convention delivered a Draft Preliminary Report that concludes that the US compulsory license for jukeboxes is incompatible with the Berne Convention, at least insofar as works of foreign origin are concerned. AMOA submitted comments on the Draft Report on March 31. For the convenience of the Subcommittee, a copy of AMOA's comments is attached to our prepared testimony. of particular concern to AMOA is that the consequences for our industry of US accession to Berne are unclear. We believe, as Mr. Donald Curran, then-acting Register of Copyrights stated in testimony before this subcommittee last year, that: "What is at stake in our system is the amendment of our The Nor do we believe it should happen intentionally. question of whether Berne is self-executing should not be left to the uncertainties and delays of future litigation. What the industry, copyright owners and the public need is efficiency, certainty and rpedictability. Our testimony today will focus on the state of the industry and our view of the consequences of U.S. adherence to that today there are roughly 225,000 jukeboxes in operation in the United States, of which 50,000 60,000 are owned by the restaurant, tavern or other establishment in which they are located. In 1973, sales of 45 rpm records (of which the industry is by far the major buyer,) totalled 228 million. In 1983, only 125 million 45 rpm records were sold. Information supplied by the U.S. Copyright Office further details the downward trend in the industry. The following table shows the number of licensed jukeboxes for the years 1978 through 1985 (as of February 1986): One of the major factors explaining this decline is the rapid increase in the licensing fee from $8 per jukebox in 1978 to $50 today. Any new costs associated with licensing--which could result from U.S. accession to Berne-- would only hasten this downward trend. AMOA strongly believes that any system that separates foreign works from works of domestic origin with respect to |