the ASCAP money, do you not also receive some type of consideration for the use of this in the motion picture? Mr. HAMLISCH. You are looking at a person who, because I was not happy with the way things were going as a composer-right, "the way things were," thank you that was a "sting" in the room there-with my business as a composer, I went to other sources, that is, I became a movie composer, so naturally I got a fee. Most people are not as fortu nate as me. Mr. DANIELSON. I think your answer was yes. Mr. HAMLISCH. Yes, but that is just for a movie song. Mr. DANIELSON. That is my only question. I would like to know-perhaps Mr. Feist can help me here--I think that you and your family have been in this business for a long time, right? Mr. FEIST. That is true. Mr. DANIELSON. I remember when I was a boy, there was a tune called "I Wonder What's Become of Sally" and I think that it said Feist Publishers. Mr. FEIST. We never did find out. Mr. DANIELSON. I would like to know this. About how often in your industry is the situation one in which the publisher buys the copyright, takes the total assignment or purchase, rather than just a contingentfee contract? Mr. FEIST. I would think that is almost nonexistent today. Mr. DANIELSON. It is almost all on a contingent-fee basis, and that would call for a percentage participation. Mr. FEIST. Division of the income between the writers and the pertinent composers. Mr. DANIELSON. Of the selection of tunes you have in your portfolio, could you give us a ball-park figure, what percentage do you own outright of the copyright, what percentage do you have under the contingency arrangement? Mr. FEIST. Since I am not now in the publishing business, may I refer to Mr. Peer? Mr. DANIELSON. Except he is such a youngster. Mr. PEER. It is my father who started the firm, sir. We do not have any songs at all, we have no songs in our catalog that we own on a complete basis. Mr. DANIELSON. Then it would follow that if the rate were raised, the composer would participate? Mr. PEER. Absolutely. Mr. DANIELSON. It is not a situation where the successor in interest, the copyright, would get the raise, and the composer would sit there, as Mr. Blake says, and be like a fly? Mr. PEER. Not at all in our company, sir, and I doubt in any others that we know about. Mr. DANIELSON. In negotiating, how frequently does the rate exceed 2 cents? Mr. FEIST. Only when there is a composition of extended length; in other words, a symphonic work which might take 20 minutes. Some years ago when the LP came along, by accommodation between the recording industry and the publishing industry, that rate was established at a quarter of a cent a minute. The record industry recognized the 2 cents really was not enough for a symphonic work that could be put on one side of a record, so that is what those figures over 2 cents cover. Mr. DANIELSON. Could the recording industry-why cannot they enforce the 2-cent rate in that sort of work? Mr. FEIST. I would hope that they would not, but they could. I believe they could. Mr. DANIELSON. I was looking for some kind of a loophole here which you could get around. Are those compositions in the public domain, perhaps? Mr. FEIST. No, although this gives me an opportunity to make the comment that I was anxious to make. When the record industry talks about classics, they are mostly talking about public domain works. There are woefully few contemporary compositions available on recordings presently under copyright or written by living composers, so the one-quarter cent rate would not apply to the classics. Did I answer your question? Mr. DANIELSON. What rate? Mr. FEIST. One-quarter cent a minute would apply to copyrighted classical works. Mr. DANIELSON. I see, and the last question I have here is really, throwing it right out into the ring for anybody to snap at it if they wish. Here is the question. The compulsory license seems to have served a purpose in one respect, at least, of making the music available to any recording industry or company that wishes to make a recording. The rub comes when we come to the ceiling of 2 cents. It seems to be pretty hard to have a compulsory license without some kind of a rate or fee also included within that law, so the question seems to be, which equity is the heavier here? Is it better to have a compulsory license without, with a fee, or have no compulsory license with a potential of monopoly, but with open negotiations? I just wonder if there could be some alternative. The thing that bothers me right now, could we have a compulsory license with the provision that the licensee would never have to pay open to negotiation on the first publication, but that the subsequent licensees, the compulsory licensees, could not be compelled to pay any more than the highest rate charged by negotiation. Mr. FEIST. I think there would be great danger in that, Mr. Danielson. If someone were extremely eager-and this would be usual-to get first exposure of a new song or a new work, he might then make a deal at an unrealistically low price just to get it in circulation, and then under your concept he would be tied in every one of the subsequent licenses and every other recording of that work. Mr. DANIELSON. Of that particular work. Mr. FEIST. He would be tied to an unfortunate deal that he may have made for reasons of anxiety or some other—— Mr. DANIELSON. Of course, you have free enterprise entering in there in fixing the rate. I want to think about that further. Mr. Hamlisch, here now, he has a real giant smash hit, and he could probably next time around get 4 cents if he wanted to. Thank you all very much. We must adjourn this particular committee, this particular subcommittee hearing, subject to the call of the Chair. I am going to leave the record open since there is no objection 57-786-76-pt. 3————18 to have our subcommittee chairman make a final determination of how much of this statement will be quoted in the permanent record, but the committee now stands adjourned. [Whereupon, at 12:15 p.m., the subcommittee adjourned, subject to the call of the Chair.] [Subsequent to the hearing the following letter was received for the record:] Hon. ROBERT W. KASTENMEIER, AMERICAN FEDERATION OF MUSICIANS Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: I submit this statement on behalf of the 330,000 members of the American Federation of Musicians of the United States and Canada. Though thoroughly committed to the objective of enhancing the materialistic rewards for the contributions made by creative artists, we are deeply concerned over the proposed increase in mechanical royalties set forth in Section 115 of S. 22 and HR 2223. It is one thing to enlarge the monetary return of all creative artists; it is quite another to grant a disproportionate portion of a finite source, the profits of the employer, to one segment of creative workers at the expense of all other such workers. And that difference is emphasized where, as here, the favored segment is given its share by legislative fiat whereas the others are subject to the inevitable vagaries and risks of collective bargaining. Nor does our opposition to Section 115 reflect the slightest desire on our part to freeze the income of composers to that prescribed by the Congress in 1909. On the contrary, our opposition is premised on the indisputable fact that such income has been handsomely improved throughout the years. When the 2 cent rate was established, the typical record consisted of one tune. With the advent of the long-playing record, it typically consists of 10 to 12 tunes. And the income derived from this automatic increase of better than 1000% per record has been dramatically compounded by the explosion in sales volume in recent years. Viewed against these profound changes in technology and sales the proposed increase from 2 cents to 3 cents per song, or 34 cent per minute, is far more traumatic than some may think. Indeed, it has been reliably estimated that this change would impose on the industry an additional cost of approximately 50 million dollars a year. So heavy a burden will inevitably depress (1) production, (2) sales and (3) the bargaining power of those unions, like the American Federation of Musicians, whose members enjoy no similar protection. The reduction of all three would adversely affect the lot of musicians. A drop in production would mean even fewer jobs for musicians whose unemployment is already assuming the proportions of a national disgrace. Bargaining against Congressionally mandated new industry costs of such huge dimensions will render even more difficult our continuing efforts to improve (or indeed, even to maintain) existing standards of pay and other working conditions for musicians. And a diminution in sales will directly reduce two highly valued, significant sources of income and work opportunities now enjoyed by musicians. As you may know, many years of intensive bargaining-including two national strikes have produced a collective agreement under which the industry contributes monies to two types of funds for each record it sells. The Special Payments Fund is in the nature of a supplementary wage payment to members who work in the industry. Last year approximately 10 million dollars was distributed to those musicians. I repeat, any drop in sales will automatically diminish such supplementary wage payments. The Music Performance Trust Funds are an American phenomenon whose uniqueness and value cannot be overstated. Their basic mission is to sustain and encourage the use of live music which has been and continues to be seriously curtailed by all forms of recording. This mission is achieved by providing concerts that are free to the public in every area of our country and Canada. The Trustee of these Funds is, by far, the largest single employer of musicians the world has ever known. And I am aware of no other instance where the public enjoys such superb musical entertainment and enrichment without any costs--not even that of taxpayers. Here again, the drop in sales will directly reduce both the jobs of our musicians and the joys of our citizenry. For the foregoing reasons-which I truly believe to be compelling-I earnestly urge rejection of the change proposed in Section 115. Respectfully, HAL C. DAVIS, President. U.S. SENATE, COMMITTEE ON APPROPRIATIONS, Hon. ROBERT W. KASTENMEIER, DEAR MR. CHAIRMAN: It has come to my attention that the Subcommittee on Courts, Civil Liberties, and the Administration of Justice is currently considering proposed amendments to Section 111 of the Omnibus Copyright Bill, H.R. 2223, which will affect copyright matters that pertain to non-contiguous cable systems. As the author of the amendment to the Copyright Bill which these ameadments would directly affect, I would like to take the opportunity to comment on the proposed changes. Generally, I feel these proposed amendments would have the effect of improving my amendment. However, I am concerned that if certain provisions contained in these proposed amendments are accepted unchanged, the original intent of my amendment would be defeated. Initially, I would like to express my sincere appreciation to the parties involved in drafting these amendments, and in particular the representatives of the motion picture industry. Their hard work has given the subcommittee the opportunity to make further improvements in Section 111. The thrust of the amendments before you is aimed at perfecting my amendment by adding several sections intended to safeguard the holders of copyrighted video material from unlawful duplication and piracy of tapes. As I have mentioned, I feel that, in theory, these are desirable improvements. Also, I am extremely pleased that all parties concerned with the effects of my amendment are now in agreement with, and supportive of, the principle behind it. That is: bringing non-contiguous cable systems on an equal footing with contiguous cable systems in regard to copyright matters. However, it is this same concern for equitable treatment which has led me to question some additional aspects of these proposed amendments. Specifically, I am concerned with Section 111(e) (2) of the proposed changes dealing with legal transfer of video tapes between systems, commonly referred to as "bicycling." Unfortunately, coverage under this provision, as drafted, has excluded Alaska as well as Hawaii. The omission of Alaska is particularly glaring in that my state contains the largest number of cable systems directly affected by the proposed amendments. Further, if left unchanged, these amendments would write into law unequal treatment for systems located in non-contiguous areas. A principal reason behind the drafting of my amendment was to provide equal treatment between systems in both contiguous and non-contiguous areas. Alaska is the only non-contiguous state where the bicycling of tapes within cable systems is an established practice. As such, it is imperative that the subcommittee have a firm understanding of the uniqueness of cable operations in Alaska, and the effects these amendments will have upon them. With the exception of a single national news program, and, occasionally, a specially arranged program of great national interest, such as the first moon landing, Alaska receives no live television. Consequently, the nearest market providing live television is Seattle. The communities receiving cable service are spread across the breadth of the state. Those located in Southeast Alaska are between 500 and 1,000 miles from Seattle, while Point Barrow is almost 2,000 miles from live television broadcasting. Thus, not only are these cable systems a great distance from Seattle but they are also very distant from one another. These cable systems are located in small communities where there is usually one predominant industry, such as fishing or timber. The largest communities served by cable systems are Ketchikan and Juneau with 6,000 and 7,000 persons respectively. The average population for all these communities is approximately 3,000 persons. Several, such as Kotzebue, Nome, and Point Barrow, are Native communities where television is not only an educational and entertainment medium, but also is a primary tool in efforts to combat a most serious problem of alcoholism. Thus, cable systems in Alaska are an integral part of the still developing communications network of the state. In most cases, they provide these small communities with their only video link with the outside world. The cable systems serving these areas are already saddled with many difficult problems stemming from their isolation. The bicycling of tapes enables these systems to cope with the tremendous expense involved in providing cable service in Alaska. Since most of the 12 small communities which have cable systems receive programming originally taped in Seattle, exclusion from the section pertaining to bicycling would cause significant disruption in programming and service as well as requiring these stations to pay an added expense which they cannot bear. The exclusion of Alaska cable stations from the established practice of bicycling tapes within systems while allowing such practice in other non-contiguous zones would be a grave injustice. Additionally. I would like to point out a problem contained in Section 111(e) (1) (C) (ii) which deals with prevention of duplication during the actual taping process. Again, this appears to be a proposal designed to cover only a certain portion of non-contiguous cable operations, namely those which have their own taping facilities. Taping for cable systems in Alaska is done in Seattle by separate firms. As such, there is no possible way cable systems of this type can guarantee they will prevent duplication (during taping) by facilities they neither own nor operate. Although I am sure that the subcommittee is familiar with the legislative history of the "Stevens Amendment," I do believe a cursory review of its purpose will be helpful in understanding the problems I have outlined. Cable systems in non-contiguous zones, such as in Alaska and Guam, are too far from the mainland to receive television signals off the air or by microwave. Therefore, there is no way these systems can get their full programming without taping. The taping is done in the contiguous 48 states and shipped for cablecasting. When aired, the program is a nonsimultaneous secondary transmission. Under present law, cable systems that take signals off the air or receive them by microwave for simultaneous broadcast do not violate copyright laws. This principle has been supported in Fortnightly Corp. vs. The United Artists Television Broadcasting System, (342 US 296) and Teleprompter Corporation vs. Columbia Broadcasting System, (43 LW 4323). However, the law is unclear with respect to cable systems which broadcast non-simultaneously. The Congress has expressed its opinion, as evidenced in the Copyright Bill, that copyright owners should be compensated for cable transmission. The cable broadcasters have accepted this in principle. The technique which will be employed to achieve this will require cable broadcasters to pay a fee into a general fund from which copyright holders may draw payments. This technique is designed to avoid protracted individual bargaining over programs and prices. Unfortunately, because of the unclear legal status of non-contiguous cable svstems, this is precisely what has begun to develop in these areas. Non-contiguous cable systems have found themselves faced with the very real threat of program-by-program, system-by-system negotiations with every single copyright holder for permission to carry programming. My amendment was designed to place all cable systems on an equal basis under the law, and to help disperse legal clouds shrouding the status of non-contiguous cable systems as regards copyright matters. That is why I am concerned that any further changes regarding this situation retain this "equal footing" concept between cable systems. As your subcommittee may know. Alaskan cable systems did enter into a consent agreement last year with certain motion picture corporations covering the use of copyrighted material. This is a three year agreement of which one year has already expired. This consent agreement does not solve the basic problems addressed by my amendment. It simply binds the parties to a temporary settlement covering a certain percentage of broadcast programming. The threat of further litigation |