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Our decisions on marketing are to determine approximately how many copies of a new book we can sell in perhaps a 2- or 3-year period.

The point we would like to register is that the decision is not in thousands, tens of thousands; it is in hundreds of copies. We can put out a book that is reasonably successful for science at between 1,500 and 2,000 copies.

One of our many periodicals is called Transplantion, an original primary research journal. It is successful and has about 1,100 subscribers all around the world. If we drop 100, 200, 300 copies because some feel they can photocopy this journal, as many people do, it eventually will go out of existence.

We don't think that is good for science. The 3-M people are beneficiaries, with their great products, of the original results printed in many scientific and scholarly journals. If photocopying is indiscriminately done by many, mostly innocent, infringers, many scientific journals will go out of business.

We have made some recommendations that I think would get to the heart of it. As pointed out above in our prepared testimony, we recommend that liability for copyright infringement be extended to include the owner and/or lessee of a copying machine.

We recommend, also, that the manufacturer of a copying machine be required by statute to affix a permanent warning in a place easily visible to the user to the effect that the use of the machine is subject to Federal laws on the reproduction of currency and on the reproduction of copyrighted works.

I would now like to turn this over to Mr. Old, to amplify on how we feel about section 107.

Mr. Old. Basically, 107 we would allow to stand as is. We have tried, and I have tried as an individual, to draw up a set of rules for defining fair use. I have tried to draw up a set which would define fair use within our very limited field.

May I digress for a moment and point out that we publish in a very limited and very important field, biomedical science. Our two companies publish or print about 150 journals. We publish, ourselves, about 45 of them. They are mostly for scientific societies.

Within that very limited field, I have tried to draw up a set of working rules for ourselves and the other publishers who deal with that type of material, and I must admit that I could not make the slightest suggestion. I know what the working principles are, because I deal with them all the time, but I could not put them into a concrete form as a guide for other people because they vary from book to book, from journal to journal, from user to user, and from the ultimate use to ultimate use.

I cannot define fair use other than as recommended in H.R. 4347. Mr. St. ONGE. Thank you.

Then, gentlemen, it would be the gist of your testimony that to allow a private individual to use a photocopying machine to make a complete copy of your works without being liable for copyright infringement could put you out of business.

Mr. LODWICK. Yes, sir.

Mr. Sr. ONGE. And you don't have specific language to add to the proposed section 107 as it stands in H.R. 4347?

Mr. Old. The section stating fair use?

Mr. Sr. ONGE. Yes.
Mr. OLD. No.
Mr. LODWICK. No.
Mr. St. ONGE. I have no further questions.
Mr. Poff ?

Mr. Poff. I don't think this question is necessary, but to perhaps draw the boundaries, you would not expect the copyright owner to have a cause of action against a businessman who used a copying device in his office to copy from a news periodical a copyrighted piece to transmit for business purposes to another business associate !

Mr. Old. There is the point where you have to set up rules. Yes, in some instances, and in one specific instance which has received much publicity, that very thing that you mentioned causes loss not to us, but to the publishers of Washington newsletters, Kiplinger Letters. I don't cite those as specifics, but as the general type of material. Where they once sold 50 copies to a business firm, to go to 50 key executives,

a it is my understanding from reading in the news that that has dropped tremendously. They are copied, instead, and distributed.

Fortunately, they have been able to get around that. They have had to go to the extreme of printing the basic information against a red-orange background which, on the photocopying machine, comes out black. I have often wordered if we shouldn't perhaps get together with the ink manufacturers.

Mr. Porr. If you do, they will develop a countermeasure.

Mr. Old. Of course. But that is a specific instance where photocopying has seriously depreciated the actual investment of a publisher.

Mr. LODWICK. If they develop something to counter this, it will come right out of a scholarly or scientific journal, if it still exists.

Mr. Poff, I would like to add one thing. In your fine State you have two medical schools, very fine ones, down in Richmond and Charlottesville. I have been to both of them.

Mr. Poff. I hope not as a patient,
Mr. LODWICK. No, sir. I would like to illustrate a point.

Suppose a doctor from down in one of the western counties has a patient with a rather puzzling complex of symptoms and signsmaybe a tropical disease—so he picks up the phone and calls one of his buddies in one of the departments of the medical school. They fill in each other on a few things and then the doctor is transferred over to the medical librarian.

The librarian gets into "Index Medicus,” looks up the entry for the disease, takes photocopies of articles from maybe 12 journals, sticks them into an envelope and mails them to the doctor.

You can also have a different situation. Suppose the librarian says, "The Williams & Wilkins Co. has just come out with a nice book on the subject, but we only have one on the shelves. We will copy the book and send it off to you.”

This is where this gray area af fair use hits us. In the first instance, where articles from some journals were photocopied, we know darn well this particular doctor wasn't subscribing to, or wouldn't subscribe to, a journal on tropical medicine. But where it gets sticky, even in this case, is the patient gets cured, Blue Cross takes care of the doctor, the taxpayers take care of the library, and here

we are,

Now, if they send the book, the library should send the book they have on their shelves. If they don't, the doctor could buy the book. We would really appreciate that.

Mr. Poff. Would you say, and I guess your answer would be “no," that the first case you put would be fair use and the second would not be?

Mr. LODWICK. In the first case, we sure wouldn't holler. If we did, that doctor would get pretty mad at us-rightly so. But somebody ought to buy, not copy, the book.

Mr. POFF. That is all I have.
Mr. St. ONGE. Mr. Edwards?
Mr. EDWARDS. No questions.
Mr. St. ONGE. Mr. Tenzer?
Mr. TENZER. No questions, Mr. Chairman.

Mr. ST. ONGE. Thank you very much, gentlemen. In just a few minutes, I believe you have made your point.

Mr. LODWICK. Thank you.
Mr. St. ONGE. The next witness is Mr. George A. Hamid, Jr.

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STATEMENT OF GEORGE A. HAMID, JR., VICE CHAIRMAN, MUSIC ROYALTY COMMITTEE, INTERNATIONAL ASSOCIATION OF AMUSEMENT PARKS

Mr. HAMID. My name is George Hamid, Jr. I reside in Margate City, N.J. I am vice president of the Atlantic City Steel Pier, also of Warhi Realty Corp., and a member of the International Association of Amusement Parks.

I would like to read a telegram from the president of the international association:

Executive committee voted unanimous association cooperation to music royalty committee. I appoint Joe Malec, Sr., as chairman, and George Hamid, Jr., as vice chairman. Please contact Blundred regarding your desires.

Mr. Blundred asked that I appear in behalf of the association, and also for our corporation.

I will do my best to summarize where I can, but I am deputized by the association to present this in the most effective form I can.

My purpose is to bring to your attention the degree of monopolistic power that the proposed bills on copyright will create. I should like to examine portions of the bill as they would apply to an amusement organization that uses music as background or which engages acts in the variety field whose performances entail the use of music. Most of our Nation's amusement parks would fall into that category.

The amusement operator, being essentially a small businessman, does not have the wherewithal individually or collectively to do legal battle with the gargantuan copyright organizations—the American Society of Composers, Authors & Publishers, and Broadcast Music, Inc. By their own admission, these organizations have become multimillion-dollar empires.

Quoting former BMI president, Robert J. Burton, in the December 19, 1964, issue of Billboard magazine:

Since BMI was formed, broadcasters have increased their payments for per forming rights by over 700 percent, from under $7 million a year to over $50 million. The entire field of music has increased 60 percent more than the national

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economy. Payments for performing rights, which before BMI was formed were limited to a handful of people on Tin Pan Alley and in Hollywood, are now distributed throughout all of the 50 States.

As to the monopolistic nature of these two copyright giants, I again quote President Burton in the same article:

BMI was formed with the complete approval of the Justice Department 25 years ago to combat what the Department itself recognized as a complete monopoly by ASCAP.

The only difference today is that copyright holders represent not a single monopoly, but a dual monopoly. No music user has had his ASCAP rates reduced because of BMI. On the contrary, they have been raised. But now, in addition to this fee, music users must also pay a substantial fee to BMI. The burden of monopoly was not eased by the creation of BMI, but was made more painful and more final.

In extracting language from the proposed statute, we come upon the following:

Section 106: The owner of copyright has the exclusive rights to authorize in the case of musical works to perform the copyrighted work publicly;

Section 201(d): The ownership of a copyright may be transferred in whole or in part.

Section 501: Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 117 is an infringer of the copyright. The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of sections 205(d) and 410, to institute an action for any infringement of that particular right committed while he is the owner of it.

Section 504: An infringer of copyright is liable for either the copyright owner's actual damages and any additional profits of the infringer or statutory damages. The copyright owner may elect to recover, instead of actual damages and profits, an award of statutory damages with respect to any one work in a sum of not less than $250 or more than $10,000 as the court considers just. In a case where the copyright owner sustains the burden of proving that infringement was committed willfully after service upon the infringer of a written notice to desist, the court in its discretion may increase the award of statutory damages to a sum of not more than $20,000.

Section 506: Any person who infringes a copyright willfully and for the purposes of commercial advantage shall be fined not more than $2,500 or imprisoned not more than 1 year, or both, for the first such offense, and shall be fined not more than $10,000 or imprisoned not more than 3 years, or both, for any subsequent offense.

Read collectively and in summary, this means that any establishment using music via performers or any mechanical device enhancing or reproducing the music is subject to heavy legal penalties if he does not enter into a contract with BMI and ASCĂP.' The copyright organization has the option of calling for statutory damages. While the monopolistic power of copyright organizations has been clearly demonstrated in its so-called negotiations with music users, this law will provide them with absolute tyranny of the music-using small businessman who cannot afford costly and extensive legal battles.

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At this point, I call your attention to the arbitrary tactics of BMI in its lawsuit against Warhi Realty Co., Inc., and the city of Atlantic City.

Early in the spring of 1954, the Steel Pier negotiated to present a concert starring the Beatles in Atlantic City on August 30, 1964. When negotiations were finalized to rent the Convention Hall, instead of using the Steel Pier premises, Warhi Realty Co., Inc., conducted the operation of the concert. The tickets, however, read "Steel Pier Presents the Beatles.”

On July 28, 32 days before the concert, we received a letter from BMI written by George Gabriel, its vice president-exhibit B-advising us:

The BMI public performance license fee for live musical attractions as of July 1, 1964, is 1 percent of the gross box office receipts excluding taxes.

We were stunned, because the customary BMI fee for a concert was $10 per performance, with a maximum in very exceptional cases of $25.

In an effort to get by this concert, I answered BMI per exhibit C, in which I explained that the Steel Pier and the Atlantic City Convention Hall already had BMI licenses. On August 5, the regional supervisor of BMI-Eugene Colton-advised that the Steel Pier license is restricted to the Steel Pier premises and the Convention Hall is not licensed by BMI, therefore, an additional license was required by BMI per the terms of the July 28 letter-exhibit D.

At this time it was apparent that the concert would gross in excess of $65,000, but would net a mere fraction of that amount because of the high cost of presentation. One percent would mean that BMI was raising its concert rate from $10 or $25 to a sum in excess of $650, or better than 2,500 percent. On August 13 I reiterated by letter that the Steel Pier was presenting the Beatles and that I accepted the letter of August 5 as an indication that Steel Pier was licensed. See exhibit E.

On August 14 Mr. Colton wrote exhibit F-reiterating the position that a separate license was needed. This letter arrived in my absence and was so answered on August 17 by my secretary-exhibit G.

From that point on we received no further letter communications on the subject of the Beatles.

The next communication from BMI did not deal with the Beatle matter, but canceled the license for Steel Pier which was negotiated in September of 1960 and demanded that, instead of the $200 annual fee that the pier was paying:

The BMI fee is now 1 percent of the total expenditure for the services of performers and musicians employed for the various musical attractions for the

season.

Again, it was hard to believe the contents of the letter and it was answered on November 4exhibit H-pointing out that the relative box office appeal of an attraction was not related by percentage to the music rendered and that this was not a realistic basis for a license.

a Relative to the Beatles, the next communication we received was a summons on October 30 charging Warhi Realty Co., Inc., and the city of Atlantic City with 15 counts of infringement.' Naturally, BMI elected the statutory damage procedure, since the most that they had asked for, even in their exorbitant license offer, was only $600-odd. Fifteen counts at the statutory minimum of $250 totaled $3,750.

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