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didn't recognize was the coin machine because we contend it didn't exist in those days.
Mr. ROGERS. While they may not have recognized it then, by this bill we propose to recognize it now, do we not?
? Mr. WATTENBERG. Yes. There is a question, sir, as to whether we are creating a new right or merely extending a new right to an old industry.
Mr. ROGERS. Well, even assuming that it is extending a new right to an old industry, it creates then a new right to collect something they were unable to collect under the old right.
Nr. WATTENBERG. Well, sir, I bow to your definition of a word. As I see it, when the radio and television industries were born, it did not take a congressional act for them to be brought under the purview of the existing statute. In that respect I say that we didn't have
Ι to ask for a new right, and I say that the same logic should be applied here. Because of an unfortunate use of the words "coin-operated machine” in 1909 an industry which is new and which has grown to tremendous proportions has had a free ride all of these
years. I heard Mr. Raine, speaking for the record companies, refer to the exploitation which the coin machine gives to music. I have heard that argument advanced many, many, times to justify all sorts of uses of music, infringing uses of music. People will print music without authority, and they will defend themselves by saying, “Look at the number of people that we are making your music available to.”
I mean that that is an old argument. All users exploit music, if you want to give “exploit” that sort of a definition. I don't think that the coin-machine industry does any greater exploitation for music than radio or television, yet radio and television pay, and they recognize without any argument that they should pay. Mr. ROGERS. Are not radio and television within the law? Mr. WATTENBERG. Yes, sir; they are within the law. Mr. ROGERS. And within that right that you are talking about? Mr. WATTENBERG. That is correct, sir. Mr. ROGERS. And if they violate it, they must pay damages? Mr. WATTENBERG. That is correct, sir.
Mr. ROGERS. And, of course, radio and television are in business for profit, the business of entertaining ?
Mr. WATTENBERG. That is correct, sir.
Mr. WATTENBERG. He is in business for profit, too. He sells a different commodity. He may sell food or beverages whereas the radio station sells its facilities so that another product may be advertised.
Mr. Rogers. That is right, but his main thing is advertising and entertainment.
Mr. WATTENBERG. That is correct.
Mr. ROGERS. The tavern keeper, on the other hand, is in the business of selling liquor and food!
Mr. WATTENBERG. That is correct.
Mr. WATTENBERG. No more so than the restaurant involved in the Herbert Shanley case. There we had the same sort of a situation except that instead of music being furnished by a jukebox it was furnished by a live band. At that time the Supreme Court rightly
recognized that although it was a byproduct it was all part of the inducement to come in and partake of the food and pay the cost of it.
Mr. Rogers. Then any byproduct, whatever it may be, that contributes to the profit of the operator should bear its portion of the traffic just as should an operator who may entertain and have that as his business.
Mr. WATTENBERG. I think so, sir. In any event, I don't feel that the question of whether the jukebox exploits music is relevant because if this thing that Mr. Raine refers to as exploitation were any sound argument for the nonpayment of royalties, why, the jukebox and radio and television and hotels would exploit the industry right out of existence. It is obvious that the real purpose of the performance is not to exploit our music, sir.
I also want to touch briefly on the question of price that Mr. Raine on behalf of the record companies referred to. He mentioned that this added royalty would necessitate an increase in the price of records and that it would have harmful effects upon their market.
I can only say this: That in 1909 the compulsory license provision was enacted and a 2-cent royalty was provided for. The penny isn't worth a penny today, if you take the 1909 standards, and, as a matter of fact, every item of cost that goes into the making of a record has doubled perhaps several times. But the statutory royalty that was enacted in 1909 is still there and never has been increased.
As a matter of fact, today because of economic pressure and competition, it very seldom happens that a publisher or a writer can obtain the full 2-cent statutory royalty when he deals with a record company.
Mr. ROGERS. Do you think that the problem may be met by increasing the amount of the statutory royalty, say, from 2 to 5 cents ?
Mr. WATTENBERG. No, sir, I don't think that that would solve the problem either because the section which sets up the statutory royalty was enacted primarily for the manufacture of a device to be used for private use in the home, and you can't distinguish between the two devices—the one that is used in coin machines and the one that is sold for use in the home. You would saddle the home-use device with something that is intended to be applied to the other.
I am not speaking about royalties or amounts. I merely offered it as an argument, and I didn't intend to advocate at this time the increase in the statutory royalty. Mr. ROGERS. You feel that those who collect the nickels that
into the jukeboxes when they are played, inasmuch as they are in a separate field by themselves, should help pay for the traffic and in getting back to the authors and those who write the songs the thing that is due them? In other words, they have an interest in it, and if anybody else makes anything out of it they should make something out of it?
Mr. WATTENBERG. Yes, sir. I feel that the person who exercises the right to his own profit should make the contribution to the copyrighter. As a matter of fact, I think the Congress in 1909 recognized that because when they provided for the 2-cent statutory royalty, they said that the payment of that fee would not free the device if it were subsequently used for profit; and I think that it is pretty clear that what they had in mind was that if the user, the purchaser bought that record for the purpose of public performance for profit he was the one to pay the contribution, to make the contribution to the writer for the performance.
I am not at all impressed—and I don't mean to say this in
this in any sort of a nasty way—I am not at all impressed with the argument that an increase in price of records is a valid argument against this bill because the price of records has increased on various occasions without any awful effect upon the record industry. They have had to increase their prices because their labor went up, their shellac went up, and all of their costs went up, and so they increased their prices. And now if their cost of manufacture, let us say, were increased by 1 penny I am sure that they would increase their price because they are in business to make money, and I don't see why they should be so upset at this prospect in dealing with an industry which for 40 years has built itself up gradually until now it is an enormous industry; it is big business, and they should not undertake to protect that industry against the payment of a trivial fee. That is all I have to say. Mr. Bryson. Thank you. Are there any further questions? Mr. HARRIS. Mr. Chairman, I would like at this time to introduce a letter from the National Federation of Music Clubs, whose president is Ada Holding Miller. I believe they favor this legislation. The letter states:
As president of the National Federation of Music Clubs, I should like to inform you of the fact that the entire membership of our organization, which functions throughout the 48 States, wholeheartedly supports the measure which you have introduced to amend the Copyright Act, H. R. 5473.
There is one paragraph in that letter which is not quite clear, and perhaps, Mr. Wattenberg, you can enlighten us on it. The paragraph reads:
If composers and authors receive just compensation for the profitable use of their music by the jukebox operators, increased funds might thereby be made available to further the cause of American music. Additional facilities for musical education will be provided in schools and colleges, scholarships will be granted to deserving young creative talent, and further aid will be given to meritorious composers of serious works.
Can you tell us how that is going to be carried out?
Mr. WATTENBERG. I might say that I wasn't familiar with that letter. The National Federation of Music Clubs is one of the member organizations of the National Music Council, and they probably sent that letter in on their own entirely independently of the councii. In fairness and to be quite honest, I think that the party who wrote that letter must have been under a misapprehension because I don't think that the moneys which might come in from this bill would find their way into the funds that she speaks of. (The following telegram was received subsequently:)
PROVIDENCE, R. I., October 31, 1951. Mr. L. JAMES HARRIS, Counsel, Subcommittee on Patents and Copyrights,
House Committee on the Judiciary, House Office Building: My attention has been drawn to the fact that at the hearings on H. R. 5473 on October 25, 1951, you questioned the statement made by me in a letter to Chairman Bryson endorsing the proposed legislation.
My statement to which you referred follows: “If composers and authors receive just compensation for the profitable use of their music by the jukebox operators, increased funds might thereby be made available to further the cause of American music. Additional facilities for musical education will be provided in schools and colleges, scholarships will be granted to deserving young creative talent, and further aid will be given to meritorious composers of serious works.” You then asked Sidney W. Wattenberg, appearing on behalf of the National Music Council, how this would be carried out. To your question Mr. Wattenberg replied that I must be under a misapprehension.
For the information of the committee and in the interest of accuracy, I should appreciate having the records clarified in this regard. If H. R. 5473 becomes law there is no doubt whatsoever in my mind that musical education and serious composers will benefit substantially. In the past the American Society of Composers, Authors and Publishers has repeatedly donated a portion of its royalties to the National Federation of Music Clubs, The National Music Council, and other organizations providing musical scholarships in schools and colleges and otherwise assisting talented young people and meritorious composers.
If H. R. 5473 is enacted I am convinced that composer, author, and publisher members of ASCAP who will benefit from increased royalties will participate even more liberally in encouragement of serious music through our and other organizations. My personal knowledge of the sincerity and probity of the past and present leadership of the society is such that I feel certain that enactment of H. R. 5473 will result in substantial help to American music and musicians through the concrete means that I have outlined. I should appreciate your inserting this statement in the record of the committee hearings at the point immediately following Mr. Wattenberg's reply to your question.
ADA HOLDING MILLER,
President, National Federation of Music Clubs. Mr. HARRIS. Mr. Wattenberg, you mention in your statementThat author and composer nationals of foreign countries complain bitterly about the legalized piracy of their works by the jukebox. They are protected against it in their native lands, but as a condition to protection in the United States they are forced either to refuse to permit the manufacture of any phonograph records of their works at all or, as an alternative, suffer the widespread use of their works in jukeboxes without royalty fee or other compensation.
May the works of authors be used in jukeboxes in other countries without compensating the authors? Are American authors protected?
Mr. WATTENBERG. No, I know of no other country where there is a situation of that type.
Mr. HARRIS. The following paragraph appears in your prepared statement:
At the present time our Government has appointed delegates to meet with the representatives of other nations under the framework of UNESCO, with a view toward working out a universal copyright convention. The exemption given to jukeboxes will be a serious obstacle and it should be removed from the statute.
We have a letter on this subject from the Department of State which, in part, states:
The Department, therefore, believes that an appropriate solution to the problem which would eliminate the present friction could lead to improvement in the protection of United States works abroad and would lead to the opportunity for developing and obtaining general adherence for a satisfactory universal copyright convention, a project which is now being developed in UNESCO.
And the previous sentence of the Department's letter reads:
On a number of occasions in the past the Department has received complaints from foreign governments and their citizens, particularly in Latin America, concerning the present situation in which no such payment is provided, together with accusations that this treatment is essentially a form of piracy of their works.
The Department of State, by the way, appears to be in favor of the bill.
Do you happen to know of any occasions of complaint on the part of foreign governments?
Mr. WATTENBERG. Sir, no formal complaints. My sources of information are conversations I have had with delegates at meetings of the
so-called panel of copyright experts which acts in an unofficial advisory capacity to the delegates, upon which committee I have the pleasure of serving.
I will say this: That in the 1947 hearings a similar statement was made by the Department of State through its then legislative counsel; that is, that he had found that the presence of the coin-machine exemption was indeed a source of resentment on the part of foreign authors and composers. I think he mentioned the Latin-American and the European authors and composers.
Mr. HARRIS. I have one other statement, Mr. Chairman. The Librarian of Congress, Dr. Luther H. Evans, and the Register of Copyrights, Mr. Arthur Fisher, are in favor of the elimination of the jukebox exception in the copyright law, and here is a letter to that effect addressed to the chairman.
Mr. BRYSON. These letters will be admitted for the record. (The letters and statements referred to are as follows:)
STATEMENT OF SIDNEY WILLIAM WATTENBERG BY AND ON BEHALF OF MUSIC
PUBLISHERS' PROTECTIVE ASSOCIATION, INC.
Music Publishers' Protective Association, Inc., is opposed to the present statutory exemption permitting the public performance of musical compositions on coin-operated machines without payment of fee or royalty, and therefore favors support of H. R. 5473 for the following reasons :
I. The coin-operated-machine exemption has become antiquated and obsolete, and permits the appropriation by one group of the property and rights of another without compensation.
II. H. R. 5473 safeguards the interest of owners and operators of jukeboxes and other persons now covered by the exemption by fixing a maximum royalty which can be collected for the use of a musical composition.
III. H. R. 5473 would remove from existing law a provision which has caused and is causing great resentment on the part of author and composer nationals of foreign countries.
I The Music Publishers' Protective Association, Inc., is a membership corporation, organized and existing under the laws of the State of New York. It is the trade association of the popular music-publishing industry and lists among its members many of the Nation's foremost publishers of popular music.
The association strongly urges the enactment of H. R. 5473 into law. Its provisions will remove from the statute a clause which has become obsolete and unfair and which operates to deprive the creators and proprietors of music of the just fruits of their skill and labor.
The Constitution is the sole authority under which all domestic copyright legislation is enacted, and article I, section 8, of the Constitution makes clear that the promotion and progress of science and the useful arts is to be assured by “securing for limited times, to authors and inventors, the exclusive rights to their respective writings and discoveries."
Congress, with this concept in mind, realized that "the main object to be desired in expanding copyright protection accorded to music has been to give the composer an adequate return for the value of his composition
The committee, in reporting on the bill which eventually became the present copyright act, stated in part that in formulating the law it had in mind giving "to the composer the exclusive right to prohibit the reproducion of this music by mechanical means on the part of anybody if he desired” and “to secure to him adequate compensation from all reproducers if he did not desire to exercise this exclusive right
(See Committee Rept. No. 2222 on bill enacting Copyright Act of 1909.)
There is no doubt that the present-day use of music on coin-operated machines is one for which adequate return or adequate compensation should be made to the creator or owner of music. Even in 1909, as appears from the committee report, Congress recognized that the use of a musical composition on a coin