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"In enacting a copyright law Congress must consider, as has been already stated, two questions: First, how much will the legislation stimulate the producer and so benefit the public; and, second, how much will the monopoly granted be detrimental to the public?"
It is well to consider carefully this sound theory which has always existed in this country, as well as in England, in order to prevent a tendency to think too much of the alleged inherent rights of the author and composer instead of the actual rights of the public. In considering the rights and interests of the public, careful thought should also be given to what actually constitutes the public. Included in the public, and comprising a very important part of it, in so far as musical copyright is concerned, is the great industry which has invested millions of dollars of the public's capital, employs thousands of the public, and produces those products which the public requires for the enjoyment of the art of music. The public has a right to demand the retention of such restriction of copyright monopoly as is necessary to allow the fullest and freest use of music at the lowest possible price. That part of the public engaged in making the art of music available to the rest of the public, has a right to the unrestricted use of music, once it has been made available to the public by its creators, with only such restrictions as may be necessary in the public interest to stimulate the progress and development of the art of music.
The rights of those engaged in the music industry were recognized by Congress in previous consideration of legislation affecting musical copyright. Quoting again from the report of the Senate Committee on Patents accompanying the bill in 1909: "It is not a theoretical question but an intensely live issue affecting the livelihood of many people and the soundness of investments aggregating many million dollars."
REASONS FOR OPPOSITION
The Music Industries Chamber of Commerce opposes this bill both because' it includes provisions which it believes contrary to public interest and because the bill fails to include amendments to correct weaknesses of the existing copyright law. Specifically we oppose it because (1) it eliminates the principle of compulsory mechanical license; (2) it is retroactive in effect and grants to the exclusive use of a few persons a vast amount of music which has been for many years in the public domain; (3) it eliminates copyright registration and other formalities which are essential to safeguard the rights of the public; (4) it extends the privilege of copyright to the unheard of extent of covering public performances of musical works which are not for profit.
We believe that there should be inserted provisions which will (1) change the present unfair method of basing royalty payments upon production; (2) correct the error of omission in the 1909 Act, which failed to extend the provisions of compulsory mechanical license to so-called "word" music rolls; (3) and protect the publisher against financially and otherwise irresponsible manufacturers of mechanical devices.
COMPULSORY MECHANICAL LICENSE
Prior to 1909, the right of the composer of a musical work to control the mechanical reproduction of it through copyright was practically unknown. Only in Italy did he have any such right, and this right came only from a decision of a lower court, not by statute. No such right existed in the United States, either under the common law or by statute. This was established in the case of White-Smith Music Publishing Company v. Apollo (209, U. S.), decided by the United States Supreme Court in 1908. The same fact was established in England in 1900 by the case of Boosey v. Whight (1 ch. 122). In fact, Austria in 1895 and England in 1906, passed legislation which expressly provided that the copyright owner would not have any right in the mechanical reproduction of his work.
In 1909, Congress inserted the provision of compulsory mechanical license in the copyright law after the most exhaustive investigation and consideration of the subject. Deliberation and discussion covered a period of three years.
1 By compulsory mechanical license is meant the principle that a copyright owner who releases his musical composition to anyone for mechanical reproduction thereby automatically makes it available to every one for the purpose of mechanical reproduction at a royalty rate fixed by law. The rate in the United States is two cents.
The question of extension of copyright to cover mechanical reproduction was given more thought than all other parts of the bill combined. In recommending the principle of compulsory mechanical license the committee said:
The main object to be desired in expanding copyright protection accorded to music has been to give to the composer an adequate return for the value of his composition, and it has been a serious and difficult task to combine the protection of the composer with the protection of the public, and to so frame an act that it would accomplish the double purpose of securing to the composer an adequate return for all use made of his composition and at the same time prevent the formation of oppressive monopolies, which might be founded upon the very rights granted to the composer for the purpose of protecting his interests." In extending the right of copyright to cover mechanical reproduction, Congress realized that it was given to the copyright owner far greater rights than he had hitherto enjoyed in any country of the world, and did so primarily in consideration of the rights and interests of the public and not of those of the copyright owner.
FACTORS IN SUCCESS OF MECHANICAL REPRODUCTION OF MUSIC
Since its inception the mechanical reproduction of music has grown enormously. The availability of musical compositions as provided by the mechanical license provision of the law has been a vital factor in this growth, but other factors have been equally as essential.
Successful mechanical reproduction of music would have been impossible without the many inventions which have culminated in the phonographs and the player and reproducing pianos which we have to-day. Improvements have been the result of untold hours of painstaking study and the investment of huge sums of money in research laboratories and their maintenance. What has been said of the development of the phonograph and the mechanically played piano may be said with even greater force of the phonograph record and the music roll. Music itself would never have been of much value or appeal if it had depended upon the crude records and rolls of early days. Invention, science, and capital, however, have developed records and rolls which now reproduce music marvelously and exquisitely and which have created a demand for music from practically the entire population of the world, instead of from only a comparatively few musically cultured people.
As a matter of fact, even with the present high state of development of the phonograph record, much artistic creative ability must be expended on a copyrighted musical composition by the manufacturer before it is adapted to mechanical reproduction. All of the recording laboratories are compelled to maintain large and expensive staffs of the most highly trained and able musicians available. Compositions must be entirely rearranged and adapted fo a definite time limit set by the dimension restrictions of records and rolls, and this must be done without detracting from its artistic merit and appeal. Special arrangements must be made using peculiar combinations of musical instruments to obtain the same effect on the reproducing mechanism as normal orchestration has upon the human ear. This requires the services of as great musicians and as much creative ability as did the original composition of the music.
In order to bring the price of music mechanically reproduced within the limits of the public purse, the development of large-scale production and intricate manufacturing processes has been necessary, also requiring much research and capital investment. Not only has it been necessary to produce these products at a low cost, but an especially elaborate system of distribution had to be devised to bring these musical compositions quickly and surely to every town and hamlet in the country, and even to the entire world, in order to satisfy the public demand, which in the case of a popular hit lasts but a very short time. Much capital expenditure has been made also in advertising and sales promotion work.
It can readily be seen that there are many factors which have contributed to the development of mechanical reproduction of music, and which are now vital to it. Sound copyright theory requires that the interest of all these factors the inventors, the investors, the employees and the musicians of the mechanical reproducing industry-and especially of the music-loving public, be properly considered in connection with any proposed change in mechanical copyright.
PROSPERITY OF MUSIC-PUBLISHING INDUSTRY
It is interesting to note the prosperity of the music-publishing industry since 1909. The growth of mechanical reproduction of music has been the greatest boon the music-publishing industry has ever had. This is particularly true of so-called popular publishing. Whereas originally the music publisher depended solely on the meager profits from the sale of sheet music, they are now of little importance as compared to his royalties, which are all profit. Incidently, this is not due to any decrease in the demand for sheet music, in spite of the frequently heard protests of publishers that they should get more money from mechanical royalties because mechanical reproduction is harming the sale of sheet music, for the music publishers actually sold in 1923, according to the latest census figures available, nearly three times as much sheet music as in 1909. The royalty payments of our members, who constitute by no means all of the companies who pay mechanical royalties, have been as follows:
Advocates of the repeal of compulsory mechanical license make much of their claim that those responsible for the art of music are entitled to remuneration for the results of their brain efforts. We believe that "the laborer is worthy of his hire," but we also believe that the music industry pays the music art well for its contribution to the mechanical reproduction of music. The mechanical royalties constitute only a minor part of the financial return which the art of music collects from the industry. The artists who make recordings, the musicians who adapt and arrange the music, and the members of the many bands and orchestras who perform at the recording laboratories, all represent the artistic side of music and are well and liberally paid by the music industry. The art of music collected over $6,000,000 in a single year from only four of our members.
SUCCESS OF AMERICAN MUSIC INDUSTRY DEPENDS ON COMPULSORY MECHANICAL
The elimination of compulsory mechanical license would be a severe blow to the phonograph-record, player-piano, and music-roll businesses. They are dependent for their success upon access to all existing musical compositions. This fact has been recognized in most of the other leading music producing countries. Since the establishment of the principle of compulsory mechanical license by the United States, it has been adopted in England, Canada, Australia, New Zealand, India, Newfoundland, Italy, and Germany. Its proposed elimination in this bill is directly contrary to the tendency in other countries. If compulsory mechanical license is eliminated from our copyright laws, the inevitable result will be a decrease in our exports of phonograph records and music rolls, because they are subject to a double royalty, namely, the royalty required in this country and that required in the foreign country. This export trade already suffers a heavy royalty burden which would be increased materially by this bill, due to the unlimited increase of the royalty
rates in this country. In order to meet competition abroad, our manufacturers will be compelled to establish foreign branch factories, especially in those countries having compulsory mechanical license. This means an exportation of American capital and the creation of competing plants abroad employing foreign labor.
It is interesting, and perhaps significant, that there is practically no phonegraph-record or music-roll manufacturing business in those countries which do not have a compulsory mechanical license system. Thus France, a great industrial country known for the genius of its musical composers and the widespread love of and demand for music by its people, has no establishment of any consequence manufacturing phonograph records. On the other hand, in India, which has a compulsory mechanical license system, but where one would not expect to find much of a music industry, the manufacture of phonograph records is important and flourishing.
HIGHER PRICES AN INEVITABLE RESULT
Another result of the elimination of compulsory mechanical license would be higher prices of phonograph records and music rolls. Of course, the amount of the increase in royalty rates can not be foretold exactly in advance. However, it may be significant that while a phonograph reproduction of a song hit now carries a rate of 2 cents for each record produced, the rate for each word music roll of the same song, not covered by the compulsory license provision, is aften as high as 122 cents. Cheaper records are sold by the manufacturer for as little as 18 cents. An increase of 10 cents in the cost of production on such records would mean at least that increase in the wholesale price, and the price to the public would be increased at least 50 per cent. Even in the highest priced records the increase would be substantial. Does Congress wish to make the public pay from 15 per cent to 50 per cent more for their phonograph records and music rolls in order to extend the monopoly of a few copyright owners?
We have recently heard complaints from the music publishers about hard times. We realize that the income of the music publishers from mechanical copyrights is much less now than it was a few years ago. We have even heard this stated to be a reason why compulsory mechanical license should be eliminated, thus enabling the publishers to charge what the traffic will bear in order to make up by higher royalty rates the amount lost through the decreased demand for records and rolls. The publishers apparently forget that the conditions which have caused a drop in the publisher's revenue from mechanical royalties, caused fewer sales by the record and roll manufacturer, greatly decreased profits, huge losses, liquidation, and bankruptcy. The record and roll manufacturers have passed through a period of business depression, readjustment, and uncertainty which has taxed their resources and abilities to the utmost. Many of them failed to survive. The survivors are in no position to have the Government grant unrestricted monopolies on a basic raw material— music.
The present precarious position of the industry which makes mechanical reproduction of music available to the public warrants the utmost protection from any extension of copyright monopoly.
DANGER OF GREAT MUSIC TRUST
In the many hearings held prior to the passage of the copyright act of 1909, the question of the effect of the extension of copyright control to mechanical reproduction upon the creation of a monopoly in the music business was given the utmost attention by Congress. At that time Congress believed that an unrestricted grant of the right of copyright in musical works would create such a monopoly and hence would be contrary to public interest. The report of the committee transmitting the bill says "How to protect him (the composer) in these rights without establishing a great music monopoly was the practical question the committee had to deal with." And again :
"It was at first thought by the committee that the copyright proprietors of musical compositions should be given the exclusive right to do what they pleased with the rights it was proposed to give them to control and dispose of all rights of mechanical reproduction, but the hearings disclosed that the
probable effect of this would be the establishment of a mechanical-music trust. It became evident that there would be serious danger that if the grant of right was made too broad, the progress of science and useful arts would not be promoted, but rather hindered, and that powerful and dangerous monopolies might be fostered which would be prejudicial to the public interests. This danger lies in the possibility that some one company might secure, by purchase or otherwise, a large number of copyrights of the most popular music, and by controlling these copyrights monopolize the business of manufacturing and selling music-producing machines otherwise free to the world."
The conditions are as favorable now, if not more so, toward the monopolistic control of mechanical copyrights, as was the case in 1909. To-day, the control of copyrights of the current popular music is largely vested in a little group of music publishers in New York City. Approximately 60 per cent of the mechanical royalties on popular music are collected by only six New York music publishers, although mechanical companies are paying royalties to between 300 and 400 copyright owners. The publishers have a society to which they assign complete control of all their public-performing rights. The license fees paid by all of the theaters, motion-picture houses, hotels, restaurants, dance halls, and radio broadcasting stations throughout the entire country for the permission to play popular music is levied and colle ted by the agents of this society. What a short step it would be to pool their mechanical rights as they have their publicperforming rights!
The music-roll manufacturers have already learned what it means to have to depend upon this little group of publishers for most of their popular music, without the protection of compulsory mechanical license. Inadvertently, Congress failed to include "word" music rolls in the 1909 act. Therefore the music publishers have charged what the traffic would bear. Music-roll manufacturers found practically identical restrictions imposed by all the leading popular music publishers in their mechanical contracts. The price for popular hits was usually held to 122 cents. The manufacturer had to take six numbers each month, irrespective of the size of his business or his requirements, or he could get no contracts at all. It was difficult to get contracts for hits without also taking slow selling and undesirable numbers. These severe restrictions imposed almost uniformly by the large publishers, contributed greatly to the liquidations and bankruptcies of roll manufacturers as a result of which only a few survive to-day.
If compulsory mechanical license is eliminated, the practice of making exclusive contracts will inevitably develop. A mechanical company with an exclusive contract will have a complete monopoly for such compositions as are covered by the contract. This may be confined to individual compositions or to 'groups of them. In either case, the small company will be unable to get the popular hits and will be forced out of business.
What is to prevent, in fact what can hinder, one or two of the strongest mechanical companies from making exclusive contracts with the little group of popular publishers for all their mechanical rights. This would give such companies a practical monopoly of the mechanical reproduction business.
A mechanical music monopoly would be especially serious to the public. The public uses the records and rolls in phonographs, player, and reproducing pianos. Records and rolls are not interchangeable for all makes of phonographs and pianos. There are three types of records, the lateral disk, the vertical disk, and the cylinder. If the manufacturer of one type of record gets an exclusive contract, the owners of all phonographs using the other types will be prevented from the enjoyment of this particular music. The rolls for the leading reproducing pianos are not interchangeable, so that if the makers of one piano get an exclusive contract for a composition, the owners of other makes can not play that music.
Congress should be as careful to safeguard the public from monopoly to-day as it was in 1909.
WILL BENEFIT PUBLISHERS, NOT COMPOSERS
The composer is considered in connection with the enactment of copyright legislation so that his stimulation to greater efforts may promote the art of music for the benefit of the public. However, it is difficult to see how the elimination of the compulsory mechanical license can be of sufficient benefit to composers generally to result in either more or better music. The publisher will