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Mr. FINKELSTEIN. That is correct, Congressman.
There is just one other point that was brought up and that is on the ASCAP method of licensing. I think under this bill the user would have an option—the jukebox operator would have an option to pay the statutory rates to the copyright proprietor, ignoring ASCAP completely because the society does not have exclusive rights.
The member may license directly, or the society may license, at the option of the user.
Mr. Rogers. Let us explore that. Of course, if I as an individual were a composer like Rodgers or Hammerstein, I am not under any obligation to join ASCAP in any manner whatsoever?
Mr. FINKELSTEIN. That is correct. Mr. ROGERS. But do you know what percentage of the music writers who do copyright join the organization ?
Mr. FINKELSTEIN. Under a consent decree we have, Congressman, we are required to admit any writer who has regularly published a single composition. So that most of the writers of America are members.
Unfortunately, you find, although we have most of the writers of America in the organization, a very substantial number of performances of a very substantial number of compositions which are written and published by nonmembers.
There is another licensing organization that is owned by the broadcasting industry that manages to get quite a number of compositions published and performed.
Mr. Rogers. Is there any likelihood, in the event that H. R. 5473 should be adopted as is, that we might have others in the field making collections of 1 cent per record per week in addition to ASCAP?
This is what I mean: Suppose I compose a song and I do not join your organization. Suppose that song is later put on a record and goes into jukeboxes throughout the country. Under this bill I, as an individual, would have the right, would I not, to go to each one of those operators that has two or more performing for profit, and say, “I want my 1 cent a week” ?
Mr. FINKELSTEIN. Yes, Congressman Rogers. Practically the reason why the writers and the publishers need the society is that no individual writer or publisher, whether it be Hammerstein or Rodgers, is large enough or has enough money to go around and check on performances. It is an impossible task. You would spend much more money individually than you would hope to get, even under the damage provision of the copyright law.
Mr. Rogers. Following the legal theory of the proposition, would there not arise a situation where any jukebox operator with two or more jukeboxes performing for profit would have one of these records by one who is not a member of ASCAP? Could he not then be subjected, if this became law, to the minimum damages of $250 plus attorney fees!
Mr. FINKELSTEIN. I am glad you brought that up, Congressman, because that high lights the difference between this bill, H. R. 5173, and previous attempts to repeal the jukebox exemption.
Under previous bills in which there was outright repeal, true, the only alternative of the user who failed to arrive at some arrangement with the writer or his organization, would be to subject himself to the usual remedies of the copyright law, including the $250 minimum
damage provision. But this bill gives him the alternative of paying 1 cent per side per week by reporting the use to the copyright proprietor the last day of the month following the time when the record is in the jukebox, and then he has another month to pay the money.
Mr. ROGERS. Yes, but if he had the record in the jukebox during the month of September and failed to make the report on the 1st of October, or within a reasonable time thereafter, and he had really failed to make payments, then he would be subject to the minimum damage of $250 ?
Mr. FINKELSTEIN. That is correct, Congressman Rogers.
Mr. Rogers. In other words, this bill, H. R. 5473, in substance says that a jukebox operator of two or more for profit is subject to the same penalties or is required to get the same license as any individual who may use ASCAP music, and his failure to get the license can result in the minimum damage of $250 plus anything else that they may prove plus attorney fees.
Mr. FINKELSTEIN. He has this option that no one else has at this time in the field or performances; that is, to pay a statutory rate of 1 cent, which is rather low, we think, 1 cent per side per week. And if he does that, if he shows a desire to respect these rights, he need not fear the $250 minimum.
By the way, the $250 minimum-damage provision in our law is a substitute for the Government giving to copyright owners a police force. If anybody steals a man's watch, or invades his property, he can call on a policeman to eject him from his property, or to arrest him for interfering with the possession of his personal property, but in the field of copyright if you ever called on a policeman to remedy an infringement of copyright, he would probably laugh at you, he never heard of anything like that.
We have grown up with the idea that the copyright owner must be his own policeman and in consideration of that Congress gives the copyright owner, if he is successful in a lawsuit, a minimum damage of $250 because those damages cannot be computed. You can never tell how much the invasion of the right is worth.
The Supreme Court said that very thing in Douglas v. Cunningham, and Westerman v. Dispatch Printing Co., where they upheld the minimum-damage provision of $250 against the lower court awarding $10.
If you could recover only $10, nobody would sue. You would have no protection and you would have no means of recovering anything if you brought a man to court.
Mr. ROGERS. What you have advanced is the reason why the Congress in 1909 adopted the original copyright law which made ASCAP possible under the set-up and by which under your operations you have been able to provide to the writers a substantial sum as remuneration for their work.
I assume from your statement that you are still in favor of that and want it extended a little further. Is that not about it?
Mr. FINKELSTEIN. I think we are in favor of the minimum $250 damage provision, Congressman Rogers, and are perfectly willing to say to the jukebox people, “You need not fear that $250 minimum even
you do not want to make an agreement with a writer or copyright owner. You may pay the statutory rate and have no fear of the $250 minimum if you are honest in your reporting."
Mr. Rogers. Now have you visualized, or have you had any thought or idea, if H. R. 5473 should be adopted, as to the manner and method by which ASCAP may go about in collecting the 1 cent per record per week, or just what thoughts do you have in that regard?
Mr. FINKELSTEIN. Congressman, I personally visualize some difficulty in ascertaining the proprietors of the jukeboxes that you find in this bill, but I think that is a risk that has to be run under all circumstances. If the society should enter into an agreement with the user rather than having the user deal with the individual as he may at his option, I rather think that the practical thing would be to have a blanket license whereby for a fee of X dollars per jukebox per year, the user would have a right to play anything in the ASCAP repertory, and that would be a matter of negotiation.
Mr. FORRESTER. Do you mean to say that under your bill it would be 1 cent per week, but in no event more if you want to take a blanket sum? Is that what you mean?
Mr. FINKELSTEIN. Congressman Forrester, I assume that the purpose of this bill is to give the jukebox operator the option of saying “I refuse to make an agreement with anybody," just like in the compulsory license provision under which phonograph records are manufactured. The record manufacturer may say, “I don't want to deal with the copyright owner at all. I will manufacture these records under a provision of the 1909 law that says that once a record is manufactured with the consent of the author, any other manufacturer can manufacture the record upon the payment of 2 cents, the statutory rate."
Mr. FORRESTER. It appears that we have the law one way and then you are going to substitute, you are going to use a different method entirely from what you are asking.
Mr. FINKELSTEIN. I say this, Congressman Forrester, that if the license were to be worked out with the society, I should think the practical way, from the standpoint of the user and the author would be to try to arrive at a blanket fee under the free bargaining that people can engage in.
Mr. FORRESTER. But would it not be better to give us a bill and give us a plan which we could write in the law, because we all respect law?
Should we not have one that should be the one that you are going to use?
Mr. FINKELSTEIN. I do not think, Congressman, that anybody can foretell just what the arrangements will be. I may be completely wrong in thinking it will be on a blanket-license basis. The jukebox operators may not want that. They may say, “We just don't want to encourage this society to receive any more money," and they have a perfect right to do it.
They may say, "We will only go to the copyright proprietors." They may even make an agreement for the Irving Berlin catalog alone, and they may give preference for the performance of his work, if he will give them half the statutory rate.
Mr. Rogers. Do you feel that this bill, which would give to the jukebox operators for profit an option to pay the 1 cent per record per week, has its good features, rather than trying to amend the law under which the writers now secure their royalty imder ASCAP and
set the minimum of damage of $250? That is, just a blanket, putting it under the $250, you think is a little too severe?
Mr. FINKLESTEIN. Yes. We think, as a practical matter, there are two things in this bill that should be high lighted :
One, that the small user, the tavern owner, who has only a single jukebox and who owns it, is completely exempt from any liability.
, And, secondly, that the honest user need not fear a $250 minimumdamage liability.
The average large jukebox today has 24 or 25 records in it; they play both sides, and there are some that play 100 selections, 50 records played on each side.
The average really large ones and the ones that they advertise, Super-Rocket, I think they call them, have 48 selections, 24 records, and are equipped so they play not for a nickel, but for a dime, or three for a quarter, at the bargain rate. They might take in anywhere from $1,000 or more a year, and would pay under this bill-if they accounted in accordance with this bill, all the copyright owners whether in ASCAP, or not, for 50 selections, let us say, would receive 50 cents a week, or $25 or $26 a year.
That would be their maximum liability if they want to account under the statute and they need not worry about paying $250 to anybody; they pay that only when they get caught cheating.
I say, considering the fact that there are no other penalties that is not unreasonable.
Mr. Rogers. You heard the testimony here that approximately $500 million a year goes to these jukeboxes. Do you know how those figures were arrived at?
Mr. FINKELSTEIN. I think there were some such statements in the trade publication of the industry, called Cash Box. But I do not think anybody knows exactly what the figures are. Whether it is in Cash Box, or anywhere else, it is a pure estimate without any basis being given for the computation.
Mr. Rogers. You would be unable to give us any information as to how many of them may be operators of one jukebox or two jukeboxes?
Mr. FINKELSTEIN. This is something like taking judicial notice on your part. I wonder if from your own experience any of you have ever seen an establishment that has more than one jukebox in it. True, they have more than one Wall-a-matic on the wall, where you can drop your nickels in, but there is only one machine that has records in it, only one jukebox. They may have two different floors and run two different policies, and for that reason have two jukeboxes.
Mr. Rogers. In other words, if I ran a tavern down below and a dance hall up above, and I had a jukebox down below, and I had one up above, then I would come into this bill? Mr. FINKELSTEIN. That is correct, and that is a very unusual case. Mr. ROGERS. That is the exceptional case? Mr. FINKELSTEIN. That is correct.
Mr. Rogers. Now, let us go one step further. You recognize that this says there must be two or more for profit. Suppose this were for profit. In a lot of places they will have a dance floor in the middle of the tavern where fellows and girls can get up and dance, and they usually keep that there as a part of entertainment to keep them in the place.
Mr. FINKELSTEIN. Keep them buying liquor or food.
Mr. Rogers. Well, liquor and food is the main objective, and this is the side line.
Suppose this man should have a stand-by; suppose he only has one jukebox that is hooked up, but experience has shown that these jukeboxes break down quite often, and the man does not rant to go through this experience of losing a lot of business before he can get a fellow to fix it.
Suppose he has another one he can hook up in the event the other one breaks down. Would you then be able to collect the 1 cent? Or what are your thoughts on that ?
Mr. FINKELSTEIN. I suppose technically, Congressman, if there were such a place and they made so much money on jukeboxes, they could afford to have two of them under this statute as drawn, there would be double liability.
Mr. ROGERS. He would only be operating one at a time.
Mr. ROGERS. Two jukeboxes going at the same time would result in chaos rather than orderly entertainment; but suppose one was there just as a stand-by and not to be used except when the other one broke down?
Mr. FINKELSTEIN. We would certainly have no objection to having the bill provide, or the committee's report provide, that under those circumstances
you could collect from only one and not from two. Mr. ROGERS. Now, let us go one step further. You know that a number of jukeboxes are operated on a percentage basis. That is, I may own a tavern and you may own one, and Joe Doe down here owns all these jukeboxes. He comes and puts one in my place and one in your place, and all over town. He comes in on a Saturday night and opens up the box and takes out 40 percent of it and gives me 60 percent and gives you 60 percent.
Now, would he pay the 1 cent, or would you, or I, pay it?
Mr. FINKELSTEIN. I think quite clearly this bill provides that only the man who comes in pays it.
By the way, he is being generous if he offers us 60 percent.
But the liability would be imposed only on the multiple owner, and there would be no liability on the part of the individual tavern owners.
Mr. ROGERS. The multiple owner's interest is in the jukebox and what it may bring in.
Mr. FINKELSTEIN. That is right. Mr. ROGERS. My interest is to get what I can out of its being there. You would say under this bill the multiple owner would pay that 1 cent?
Mr. FINKELSTEIN. That is correct.
Mr. ROGERS. But on the other hand, if I as an individual should buy that box and only use the one box
Mr. FINKELSTEIN. You would be exempt completely. This scheme is no different, that is, the place where you impose liability is no different from the actual practice, for example, in wired music.
An outfit known as Muzak pipes music into different establishments. Mr. Bryson. Like our streetcars here in Washington.
Mr. FINKELSTEIN. There has been some controversy about that, has there not?
Mr. BRYSON. It is in the courts now.