In connection with this last statement-the endangering of its entire revenue from the United States-the Association has stated hereinabove that recently produced Mexican motion pictures have been imported from Mexican broadcasts by Valley Cable TV and disseminated to the South Texas public before those motion pictures have had even a first exhibition in some South Texas Spanish language theatres. The said theatre operators have advised that they will have to close their theatres if such a practice continues. If such a problem existed only in South Texas the economic harm to the Association's producer-members would be serious enough; however the actual and increasing wide dissemination by microwave of cable-transmitted programs could mean the death blow to Spanish language theatrical exploitation of motion pictures in the United States.

8. In no sense does the Association desire to restrict or to restrain the access by Spanish-speaking, Mexican-American communities to top quality Spanish language film and tape material, including the best Mexican-produced Spanish language feature motion pictures.

There is, in the Association's opinion, one, and only one, equitable and wholly reasonable means of achieving such public interest aim. That is for the Commission to prohibit the unlicensed importation into the United States of Mexican television signals by United States based cable television. This will cause such cable television systems to fully utilize the programs in the Spanish language originating from VHF and UHF stations within the United States.

At this point it is important to note that such domestic VHF and UHF stations, in fact, obtain by license much of the same film and tape Mexican material which Valley Cable TV imports, free of license, at a prior date. It is equally important to note that such material is, and would continue to be, available to Valley Cable TV from such domestic VHF and UHF stations although at a somewhat later date.

Such a prohibition will also prevent the serious and damaging economic harm presently caused to the Mexican motion picture and television industry.

RICHARD H. DUNLAP,
Association's Attorney.

ADDENDUM TO STATEMENT FOR SPECIAL LIBRARIES ASSOCIATION REGARDING LIBRARY PHOTOCOPYING PROVISIONS IN THE REVISION OF THE COPYRIGHT LAW, S. 1361, as PRESENTED ON JULY 31, 1973

A proposed amendment to § 108 (d) of S. 1361 was presented by the Association of Research Libraries (ARL) and the American Library Association (ALA) at the hearings on July 31, 1973. Because SLA was not aware of the proposed amendment before the hearing, I was not able to reply for SLA when the Committee's Chief Counsel asked if the ARL-ALA proposal was acceptable to SLA. Since then, I have communicated with members of the SLA Board of Directors by means of a telephone conference call.

In this Addendum, SLA is presenting our reply plus comments on several other items in S. 1361 which are pertinent to our position as well as pertinent to our comments on the ARL-ALA proposed amendment. Our comments are presented in the sequence:

1. SLA Adherence to the Position.

2. SLA Opinion Regarding the Proposed ARL-ALA Amendment.

2.1 In relation to proposed § 108 (d) (1).

2.2 In relation to proposed § 108 (d) (2).

2.3 In relation to the Qualifying Clause of proposed § 108 and to existing § 108 (a) (1) and (2).

2.4 Summary.

3. Support for proposed National Commission on New Technological Uses of Copyrighted Works.

1. SLA Adherence to its Position. SLA maintains as its first preference, the position as presented in our written statement (dated July 26, 1973) as presented to the Subcommittee. To restate our position briefly, it is one which seeks to reach an intermediate position of accommodation between the seemingly irreconcilable positions of publishers and literary authors on the one side, and the positions of some parts of the library and educational communities on the other. We have suggested that there be a provision for the payment of a per-page royalty on photocopies of copyrighted works at a rate of "cents-per-page." Such an arrangement has precedence already in the proposed Copyright Act in §§ 111, 114, 115 and 116 (relating to cable transmissions, sound recordings, etc.) A Royalty Tribunal of 20-344-73-43

the type proposed in Chapter 8 of the Copyright Revision Bill could assure that the per-page royalty rate is reasonable. We believe that a range of $0.01-$0.05 should be both fair and adequate. In addition, the publishers must themselves establish the agency for the collection and for the determination of pro rated payments to each publisher (in an ASCAP-style operation).

2. SLA Opinion Regarding the Proposed ARL-ALA Amendment. SLA could only support the proposed amendment to § 108 (d) if certain modifications were to be introduced. Some of the modifications refer to the specific wording as submitted; other modifications refer to the relationship of § 108 (d) to § 108(a) (1) and (2).

2.1 SLA objects to the unnecessary inclusion of the word, further, in § 108 (d) (1) of the proposed amendment:

(1) The library or archives shall be entitled without further investigation, to supply a copy of no more than one article or other contributions. . . .”

Inclusion of the word, further, can mean that some other investigation is required. If the intent of the proposed § 108 (d) (1) is to implement the concept of "fair use" (§ 107) the inclusion of the word, further, can result in interpretations which will inevitably lead to delays in service to the user.

Although the proposed ARL-ALA substitute for the existing § 108 (d) (1) states library or archives entitlement to supply a copy of "no more than one article or other contribution to a copyrighted collection or periodical issue . . . (emphasis supplied)," it is principally periodical articles that must be photocopied in or for most special libraries. Moreover, time is usually of the essence. Hence, the language of § 108 (d) (2) in the proposed substitute requiring “reasonable investigation" for obtaining reprints or permissions to copy is a procedure that might cripple the operations of most special libraries. A similar "procedural” requirement for obtaining “an unused copy" presently exists in § 108 (d) (1) of S. 1361. It is certain that most special libraries would prefer either no requirement to seek permissions or reprints of periodicals especially, or, preferably, some means of paying for all copying that might exceed a statutory limitation on "fair use" however finally defined. In the event that multiple copies might be required, such a proposed payment would also provide equitable payment to the publishers. 2.2 SLA objects to the underlined portions of the proposed § 108 (d) (2). "(2) The library or archives shall be entitled to supply a copy or phonorecord of an entire work, or if more than a relatively small part of it, if the library or archives has first determined, on the basis of a reasonable investigation that a copy or phonorecord of the copyrighted work cannot readily be obtained from trade sources."

The second italicized words, from trade sources, are even broader than the existing § 108 (d)(1) in S. 1361, "from commonly known trade sources," and therefore the proposed amendment is even less satisfactory. "Trade sources" is a term used to include second-hand book stores, antiquarian book dealers, etc. If the book is "out-of-print" (that is, when the original publisher's stock is exhausted), the original copyright owner is not deprived of any income if a copy is purchased from a second-hand book dealer. The mechanism of using "Books-InPrint" (published by the R. R. Bowker Co., a Division of Xerox, New York) is a simple and straight forward mechanism. The information in "Books-In-Print” is supplied by the publishers themselves. (There is no comparable compilation for periodicals.)

The first italicized words, if the library or archives has first determined, will result in very bad delays in our opinion. The larger research libraries (from whom most photocopies are requested) have, for a number of years, complained publicly of insufficient staff even to service requests for photocopies of only a few pages. There is only a limited number of librarians (in the larger research libraries) qualified to address intelligent queries to "trade sources."

2.3 Deletion of the Qualifying Clause in the first sentence of the proposed § 108 (d): ". . . whose collections are available to the public or to researchers in any specialized field."

This language simply emphasizes a qualification already stated in § 108 (a) (1) and § 108 (a) (2) that "(1) ... reproduction or distribution is made without any purpose of direct or indirect commercial advantage; (emphasis supplied) and (2) The collections of the library or archives are (i) open to the public... (emphasis supplied)."

Without further definition of the meaning of this existing language, it must be pointed out that a majority of special library operaitons are conducted for purposes of "indirect commercial advantage" for parent business or industry. Moreover, a majority of these libraries are not usually "open to the public" nor to

"researchers in any specialized field" if this language is further interpreted to mean specialized research of a competitive nature as now defined in Clause (ii) of § 108 (a) (2) of S. 1361, 93rd Congress.

Hence, the immediate concern of the Special Libraries Association in the § 108 limitation on exclusive rights is the exception from this limitation by virtue of the character of most special libraries-a point not heretofore clearly expressed to Congress or widely understood by the other library associations who have a wider public constituency. However, it is understood that it would be totally inequitable to seek a further limitation on exclusive rights by insisting upon the deletion of § 108(a) (1) and (2) language as it apparently applies to special libraries. But we would insist upon the deletion of the "access" requirement that is repeated in the ARI-ALA proposed substitute for § 108 (d) (1).

2.4 In summary, it is for the above reasons that Special Libraries Association is seeking to reach an intermediate position of accommodation between the publishers and literary authors on the one hand, and other library associations on the other hand by way of establishing some method of collecting per-page royalty copying fees in excess of "fair use" copying in special libraries-however, "fair use" is finally defined in § 107 of S. 1361.

In the view of this Association, it would be far more equitable for both publishers and libraries to establish a royalty or licensing mechanism that would free both parties from the onerous routine of seeking reprints or permissions before copying out-of-print works.

3. Support for Proposed National Commission. Proliferation of new, and ever more specialized periodicals and other publications at constantly increasing subscription rates is a major cause of decreasing number of subscribers. This proliferation of new periodicals began after World War II in the same time period that photocopying equipment became more commonly available and more widely used. All decreases in subscription income cannot be ascribed to photocopying. Publishers themselves have not applied appropriate "birth control" or management evaluation measures to their own products. Unfortunately, no unbiased data are available to sort out and evaluate the resulting claims and counter claims. Special Libraries Association wishes to emphatically state its support of Title II of S. 1361 for the establishment of a National Commission on New Technological Use of Copyrighted Works.

Special Libraries Association is aware of the many contradictory points of view and problems in interpretation that have been submitted to the Subcommittee. The Association wishes to record its commendation of the Subcommittee for its careful consideration and assessment of the many aspects of the copyright field.

DEAR SENATOR MCCLELLAN: It is my understanding that you have scheduled hearings this week on S. 1361 before the Senate Subcommittee on Patents, Trademarks and Copyrights and that you will be hearing from a cross-section of representatives of the various media on the copyright questions to which the proposed legislation is addressed.

I am writing to you as Chairman of that Subcommittee with the request that the substance of this communication be taken into consideration in your deliberations. My communication is addressed to you in my capacity as Chairman of the Board of Sterling Communications, Inc. whose wholly-owned subsidiary, Sterling Manhattan Cable Television, Inc. operates the cable television system in the southern half of Manhattan Island, the largest cable system in the nation. Time Inc., of which I am a vice president, in turn owns almost 80% of Sterling Communications.

As you are well aware, although segments of the cable industry still have serious reservations, the industry generally has been committed for some time to supporting the concept of payment of a reasonable fee for copyrights. You are also aware, of course, of the recent judicial decisions bearing upon this question and the fact that they lend support to the position that cable systems are not and

should not encompass and be liable for copyright payments particularly where they only carry broadcast signals from local television stations. It is not my intention in this letter to argue this point further beyond noting it and pointing out that inevitably these added costs for copyright will have to be absorbed by the cable subscriber. Thus, we will contribute to a situation where the viewer who subscribes to cable, very often as a matter of necessity, will pay more for "free" overthe-air signals simply because the over-the-air operations cannot deliver to him an acceptable service in either diversity or quality. It may well be that such fees should be paid by the broadcast stations themselves in return for their enlarged audiences.

However, the cable industry has advanced beyond these thoughts and my basic purpose in writing at this time is to bring to the attention of you and the other members of your committee the extent of the very heavy burden already placed on cable by various government regulatory bodies and to ask that you bear these amounts in mind in setting the levels for copyright fees under S. 1361. For instance, our company, Sterling Manhattan Cable Television, already pays the equivalent of 15% of its gross subscriber revenues as a result of governmental regulations. New York City charges a fee of 5% of subscriber revenues while the State has recently added an additional fee of 1%. The FCC, as you know, requires a payment of $0.30 per subscriber and New York State regulation authorizes payment of a fee to landlords in principle and past practice has led to an average of an additional 2.3% for that purpose. In addition to our franchise fee, we are required to pay a business real estate tax that amounts to another 7% and additional amounts to both the city and state as business income taxes regardless of our overall profit and loss.

Your proposed bill does establish a graduated scale for the copyright fees. But, in fact, a company of the size of Sterling Manhattan, which grosses approximately $5 million a year in subscriber fees, will not be substantially aided by the proivsions in S. 1361 for payments at 1% and 2%. Its practical rate of payment will be the maximum of 5%. This means that the copyright payment on the approximately $5 million revenue we receive a year will amount to an additional $250,000 annually. Thus, our company will be paying a total of approximately $1 million or 22% of our subscriber income off the "top" of our revenue before we begin meeting our own expenses, much less obtaining a profit.

Senator, you and your associates will recognize that it is extremely difficult to operate a successful business on this basis. In fact, Sterling Manhattan Cable Television has been operating at a substantial loss since its inception in 1965. It has accumulated losses of over $17 million. In its last fiscal year, it lost some $5 million on operations and another $5 million in a write-off of capital assets.

Our company has been engaged in cable television because of our faith in the future of the industry and it is our intent to continue to develop the southern Manhattan franchise. But at the same time, I am compelled to suggest to your committee that the mounting burdens placed on this industry by government regulation will greatly handicap our continued development in Manhattan and will certainly act as a general deterrent to development of cable television in the more densely populated areas of the country. That depressing effect on the future of cable may be exactly the goal that vested interests in the media are seeking. But I would note that the development of cable in this country has been recognized as a matter of public interest by most members of the Congress and declared officially a goal of public policy by the Federal Communications Commission.

Thus, I ask that you review carefully the schedule of payments listed in the bill before your committee. I earnestly urge you to reduce the levels now contemplated to a maximum of three percent. Under no circumstances could we possibly conceive of a revision upward as will probably be suggested by some of the witnesses who will appear at your hearings.

I am of course prepared to respond to any questions you or your associates may have in regard to the matters covered in this letter.

Sincerely yours,

BARRY ZORTHIAN, Chairman of the Board, Sterling Communications, Inc.

TELEPROMPTER CORPORATION,

Re: S. 1361

Hon. JOHN MCCLELLAN,

New York, N.Y., August 9, 1973.

Chairman, Senate Subcommittee on Patents, Trademarks, U.S. Senate, Russell Senate Office Building, Washington, D.C.

DEAR SENATOR MCCLELLAN: I have followed with great interest your recent hearings on S. 1361. Because I believe that the resolution of this issue will have a profound effect on whether or not the concept of broadband communications and community CATV expression reaches their full potential, I have decided to write you stating my views on behalf of TelePrompTer.

First, let me begin by stating that TelePrompTer is in favor of an omnibus statutory copyright provision which would impose reasonable copyright fees on operating CATV systems. We are in favor of passage of S. 1361 if provision is made for compulsory licensing of CATV systems for carriage of broadcast signals, in accordance with FCC rules and regulations, and if there is a statutory system of fees of the nature set forth in the statute. However, in view of the comprehensive nature of FCC regulation in this area, the regulatory features contained in Section 111 of S. 1361 can and should be deleted.

S. 1361 currently contains a formula of statutory fees based on a sliding scale ranging from 1 to 5%. Subject to periodic review of this formula, we note at the outset that such a level is on the high side and imposes substantial economic burdens on CATV development. Illustrative of the severe impact of the proposed fee schedule of TelePrompTer is the fact that the copyright payments due for the first six months of 1973 would have amounted to approximately 17% of TelePrompTer's after tax CATV income for that period.

As you know, TelePrompTer is the leader and innovator in what is now the CATV industry but what has promise of becoming a new "broadband communications" industry serving all parts of the country, both rural and urban. Since the industry is heavily capital-intensive and since TelePrompTer and the rest of the industry are financed in large part by the public equity market, an impact on income of the magnitude that the proposed fee schedule of S. 1361 would impose would have a highly leveraged, adverse effect on TelePrompTer's ability to finance its future plans. As a result, TelePrompTer would not be able to finance and build systems, and deliver on the promise of broadband and community-oriented communications, as it is now in the process of doing. Although I most definitely agree in principle that a comprehensive bill containing a sliding fee schedule is just and should be implemented, I respectfully submit that a fee schedule at least 50% lower than that presently contemplated by S. 1361 would be just and appropriate. Very truly yours,

Hon. JOHN L. MCCLELLAN,

WILLIAM J. BRESNAN, President.

U.S. SENATE,

COMMITTEE ON COMMERCE, Washington, D.C., July 31, 1973.

Chairman, Subcommittee on Patents, Trademarks, and Copyrights, Russell Building, U.S. Senate.

DEAR MR. CHAIRMAN: Thank you for giving me the opportunity to present my views with respect to certain aspects of S. 1361, a revision of the Copyright Law, title 17 of the U.S. Code.

I am pleased to submit for inclusion in the hearing record some brief comments on certain provisions in the bill which are of substantial interest to me. Sincerely,

STATEMENT BY SENATOR JOHN TUNNEY

JOHN V. TUNNEY.

Mr. Chairman: I welcome these additional hearings because: hopefully they will bring us closer to the enactment of the copyright revision bill. The decades since the enactment of the Copyright Act of 1909 have seen the invention of radio, television, cable television, and many other new technologies which have radi