Lapas attēli

The slight difference in language was necessary to protect the current lawful distribution arrangements which education institutions enjoy with firms such as Films, Inc., and to guarantee our exemption from the rest of H.R. 1029.

As in the case with H.R. 1027, we no longer object to H.R. 1029; however, under our general rules of not supporting commercial interests, we do not support H.R. 1029 if that language were added. However, under our general rules of not supporting commercial interests, we, of course, do not then take a position in support of 1029.

Thank you, Mr. Chairman.

That is our statement on the first sale doctrine.

[The appendix to the statement of Mr. Steinhilber follows:]



Agency for Instructional Television

American Association of Law Libraries

American Association of School Administrators

American Association of University Professors

American Association of University Women

American Council on Education

American Educational Theatre Association, Inc.

American Library Association

Association for Childhood Education International

Association for Educational Communications and Technology

Association of American Law Schools

Association of Research Libraries

Corporation for Public Broadcasting

Council for American Private Education

Council for Chief State School Officers

Independent Colleges Office

International Reading Association

Joint Council on Educational Telecommunications, Inc.

Modern Language Association

Music Educators National Conference

National Association of Independent Colleges and Universities

National Association of Schools of Music

National Clearinghouse for Bilingual Education

National Commission on Libraries and Information Science

National Council of Teachers of English

National Education Association

National Public Radio

National School Boards Association

Public Broadcasting Service

Speech Communication Association

Uniformed Services University of the Health Science

Mr. KASTENMEIER. Thank you, Dr. Steinhilber.

Do I understand you have different language for 1027 than you do for 1029?

Mr. STEINHILBER. That is correct.

Mr. KASTENMEIER. Thank you. I think I have seen that which is appropriate for 1027. Would you again repeat the language for 1029 that you have agreed to?

Mr. STEINHILBER. Nothing in the foregoing proviso shall apply-I am sorry-to the rental, lease or lending of a copy for nonprofit purposes by or to a nonprofit library or nonprofit educational institution.

Mr. KASTENMEIER. The only difference is the word "copy" instead of "phonorecord"?

Mr. STEINHILBER. Well, no. It is-how will I say-the critical issue is "or to." It is "by or to." Under the first it is "by." In the second, it is "by or to."

Mr. KASTENMEIER. I see. Yes.

Mr. STEINBACH. Mr. Chairman, in place of the word "phonorecord," which may appear on the copy you have in hand, we meant to say "audiovisual work."

Mr. KASTENMEIER. All right. You have indicated in that form it is satisfactory to you and to others. It is not in that form in any of the bills before us at the present time.

Mr. STEINHILBER. That is correct.

Mr. KASTENMEIER. Is it your view that as a result of these amendments, the proposed bills will have no effect at all on nonprofit libraries, nonprofit educational institutions?

Mr. STEINHILBER. That is correct.

Mr. KASTENMEIER. Of course, your coalition is quite well-known. Are there others who may not be within the purview of the members of your committee who might seek similar treatment? Does the Special Libraries Association, for example, also support it?

Are there possibly others who are not members of your organization who may or may not be included by the precise language you have agreed to?

Mr. STEINHILBER. That is always a possibility, because the coalition is what I would call one of the loosest knit coalitions of all time. We basically have a list of organizations, and we ask them will they sign on or not on any issue. Obviously, I cannot make a comment about anyone who has not.

Mr. KASTENMEIER. Sure. Well, since you are taken care of, and since you are now neutral with respect to the bill, assuming the suggested amendments are agreed to, I have no further questions of you.

The gentleman from Ohio.

Mr. DEWINE. On page 3 of your testimony you state:

We are sure that some royalty schemes, such as a foreign copyright notion called

a public lending right, will be forthcoming.

What is that? I don't know what that is.

Mr. STEINHILBER. Well, for fear of sort of expanding this hearing far beyond what the purpose is, and getting into areasMr. DEWINE. Just briefly.

Mr. STEINHILBER. It is the whole question-the best way of describing it is what I would call the difference of philosophy between the Ad Hoc Committee on Copyright and the proprietors of copyright. We view it in the tradition of this is a monopoly or a limited license which is granted by Congress under the Constitution, and they view it as an intellectual property to do with what they see fit.

If you end up with that second kind of philosophy, as is in the continent of Europe, not the United States under common law, you end up with some sort of an automatic licensing system whereby the Federal Government actually appropriates funds for the owners of copyright material to pay for public use of those materials.

The mere thought of Congress appropriating money now with a $200 billion deficit for copyright owners, leaves us a little bit cold. Mr. DEWINE. Where does that idea come from? Is that practiced in other countries?

Mr. STEINHILBER. That is practiced on the continent. As I said, it did not come to us from common law. That is why I said it was a long answer.

Mr. DEWINE. Thank you very much.

Mr. KASTENMEIER. The gentlewoman from Colorado.
Mrs. SCHROEDER. I have no questions, Mr. Chairman.

Mr. KASTENMEIER. OK. Thank you, Dr. Steinhilber, for your appearance. Of course, it may still be necessary to consult with you and your organization.

Mr. STEINHILBER. We are ready, willing and able at all times, sir. Mr. KASTENMEIER. The last witness this afternoon is another familiar face before this subcommittee, Dorothy Schrader. She speaks with the authority of one charged with implementing the copyright law, such as the Congress has enacted. Ms. Schrader, we look forward to hearing your views on the bills and on the amendments. You might identify your colleagues, also, for the committee. You may proceed as you wish.


Ms. SCHRADER. Thank you, Mr. Chairman. It is a pleasure to appear before you, and the other members again. On my right is Marilyn Kretsinger, Senior Attorney Adviser from the General Counsel's staff. On my left is Richard Glasgow, Assistant General Counsel of the Copyright Office.

As usual, we have a fairly lengthy statement which I trust will be incorporated in full in the record. I will try to summarize some of the main points of that statement.

Mr. KASTENMEIER. Without objection, your 28-page statement will be accepted and made part of the record. You may summarize. Ms. SCHRADER. Thank you, Mr. Chairman.

The Copyright Office does support enactment of both H.R. 1027 and H.R. 1029, and we urge their early and favorable consideration

by the subcommittee. You have heard from various witnesses and are well aware, I think, of the background of the problem in terms of the provisions of the current law.

I would like to briefly sketch the background of the problem as we see it, discuss some of the arguments that have been made in opposition to the bill, and express the reaction of the Copyright Office to those arguments.

First, with respect to audio recordings, H.R. 1027 would affect a different exclusive right and a different user activity than the home recording bills to which it was joined in the last Congress and which we have also been hearing about today.

But the bill does respond to the same technological development. It is the VCR, that makes it possible to perform the works in the home and also allows the consumer at wish to make copies of the copyrighted works.

Although the current number of record rental stores in the United States, which is about 200 to 250, does not seem threatening, record rental stores apparently do continue to open and the record producers in the United States contend that now is the time to solve a problem, which in the future will become more serious. On principle, they argue that sound recordings should be accorded a rental right if motion pictures and audiovisual works are granted that right. Record rental stores do cut into the profits of both the copyright proprietor and the retailer who sells records to the limited extent they now exist.

It seems likely to us that most record rentals do result in the renter making a copy. Therefore, these rentals essentially displace a sale by the record producer. Surveys show that a great deal of home audio taping is being done now, of course, and has been occurring for some 30 years, as you mentioned, Mr. Chairman.

But while the record rental stores are just starting to spread in the United States, the development of the compact disc probably will lead to a more serious problem with rentals in the future.

Turning to video cassettes briefly, H.R. 1029 would provide a commercial lending right for motion pictures and other audiovisual works. It has seemed to us that copyright owners naturally expected that this new technological wonder, the VCR, would open up new markets for the sale of prerecorded cassettes. Such a market does exist to some extent.

But we think the revenues have been diluted by the impact of home taping of and by the rental market for video cassettes. It seems clear that the consumer prefers rentals over sales in the case of video.

You have heard testimony about the ratio being perhaps 6 to 1, 45 to 1, or 40 to 1. In any case, there is a clear preference for rentals. We have seen reports of some retailers who say that during a 6-month period they can rent 1 title about 200 times and sell only 3 copies of that same title.

We have also noted reports of one video chain store owner, that his business was started with a capital investment which would be recouped by 1 month of rentals.

Various entertainment industries throughout the world have attributed a decline in box office receipts to booming video cassette rentals. In sum, we think these facts illustrate the general problem

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