SPEAKERS CONTENTS INSERTS Tables
Page 1 TOP OF DOCPRE1978 DISTRIBUTION OF RECORDINGS CONTAINING MUSICAL COMPOSITIONS; COPYRIGHT TERM EXTENSION; AND COPYRIGHT PER PROGRAM LICENSES
FRIDAY, JUNE 27, 1997
House of Representatives,
Subcommittee on Courts and Intellectual Property,
Committee on the Judiciary,
The subcommittee met, pursuant to notice, at 1 p.m., Ceremonial Courtroom, U.S. Customs House, Nashville, TN, Hon. Howard Coble (chairman of the subcommittee) presiding.
Present: Representatives Howard Coble, F. James Sensenbrenner, Jr., and William D. Delahunt.
Also present: Representative Bob Clement.
Staff present: Mitch Glazier, chief counsel; Blaine Merritt, counsel; Vince Garlock, counsel; Debra Laman, counsel; Eunice Goldring, staff assistant; Robert Raben, minority counsel; Ed McDonald, administrative assistant and press secretary to charman Coble; Mark Agrast, minority legislative director/counsel; and Elizabeth Assey, legislative assistant to Mr. Clement.
Page 2 PREV PAGE TOP OF DOC Mr. COBLE. The Subcommittee on Courts and Intellectual Property will come to order. Before we get into the business at hand, I believe the Tennessee chief executive is here, Governor Sundquist.
Did you have a word or two you wanted to say to these people? Thank you, Governor. Gov. Don Sundquist.
STATEMENT OF DON SUNDQUIST, GOVERNER, STATE OF TENNESSEE
Mr. SUNDQUIST. Mr. Chairman, thank you very much.
Chairman Coble, Chairman Sensenbrenner, when I was in Congress, I couldn't use that description. I am honored to be able to use that. To my former colleague and friend Congressman Clement and Congressman Delahunt, we appreciate you being here today. I welcome you and the committee to Tennessee.
As you know from our service together in the Congress, I have always been strongly protective of intellectual property rights, and I welcome your field hearing here in Nashville because it is an issue of considerable importance to the music industry. Some of my friends in the music industry use the phrase, ''It all begins with a song,'' and in our State indeed it does. In Tennessee the collective entertainment industries contribute $4.6 billion to our economy every year. Our music, TV and film production, and multimedia industries rely heavily on the talents of the creative community that call Tennessee home. In fact, songwriting is a $500 million business in middle Tennessee alone.
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I want to echo the concerns of our creative community that are being shared with you today, and we observed the recent actions of the European Community to extend the period of years for which copyrights apply and the recent U.S. court decision affecting copyrights for songs released prior to 1978, because both have significant impact on American industries that rely on intellectual property. Mr. Chairman, I would respectfully urge the committee and Congress to address these questions, both as a matter of fairness to our country's creative talents, but also as a matter of economic competitiveness.
Entertainment is America's No. 2 export, and globally it is the seventh largest sector of the economy and the fifth fastest growing. Our entertainment industry needs a level playing field where protection of intellectual property rights is concerned, and domestically we need legislation to clarify the recent court rulings which overturned decades of practice and precedent to copyright law.
Mr. Chairman, both Mr. Chairmen, the full committee, Chairman Coble, you and I have long known each other. I have great confidence in your judgment and respect for your convictions on these issues. I very much appreciate the forum you have provided to the music and entertainment industry leaders in Tennessee. I believe your panel is in a position to make important and far-reaching policy decisions regarding the competitiveness of America's entertainment industry.
I do appreciate more than you know the opportunity to drop by and emphasize the importance we in Tennessee place on your deliberations. In fact, we have a logo in Tennessee that says, ''Tennessee sounds good to me,'' and you can interpret that a number of different ways. But all those sounds that sound good to us need to be protected because they are the creative genius of somebody, and that is important to protect and embellish. I look forward to seeing you all tonight and thank you for allowing me to drop by. It is good to see my old friends again. Thank you very much.
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Mr. COBLE. Thank you, Governor. I appreciate your being here.
OPENING STATEMENT OF CHARMAN COBLE
Mr. COBLE. Folks, I want to thank each of you for coming. Obviously your interest is alive and well on this issue, and permit me to visit a bit informally before the hearing starts.
I am Howard Coble from North Carolina. I have Bill Delahunt of Massachusetts to my left, Jim Sensenbrenner from Wisconsin to my right, both members of the subcommittee; and Bob Clement, who represents the Nashville area, to my far left.
Yesterday I was identified in one of the national newspapers as being an avid bluegrass fan. In response to the charge of being an avid country or bluegrass fan, I plead a hearty guilty.
One of my special American heroes is a man I have heard perform at three separate concerts in my home State, and who has been widely honored in your city this week. I refer, of course, to Mr. Guitar, Chester Burton Atkins. I know we all wish him and his family well during this special week.
In the Congress and throughout life, for that matter, people who want to avoid involvement with a particular issue, particularly an issue involving some controversy, will dismiss any question relating to that issue by replying, ''I don't have a dog in that fight.'' And the issue then disappears. In this issue before us today, I have nothing but dogs in the fight, all friendly dogs: restaurants, songwriters, performers, directors, screenwriters, broadcasters, retailers, performing rights societies. I count none of these as my adversaries. If I were blessed with the wisdom of King Solomon, these differences could be summarily resolved, and all would be well. Since I am not so richly blessed, let's try to hammer out the differences.
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Today the subcommittee is conducting a field hearing in Nashville on the effect of the pre-1978 distribution of recordings containing musical compositions, copyright term extension and copyright per program licenses.
Currently, there is widespread support for legislation that would extend the term of copyright protection in all copyrighted works that have not fallen into the public domain by 20 years. This would bring the term of copyright protection from the life of the author plus 50 years to the life of the author plus 70 years, and of works made for hire from 75 to 95 years. The change would bring United States copyright protection up to similar levels of protection provided in the European Union member countries.
In 1995, the European Union, the EU, extended the copyright term for all of its member states from life of the author plus 50 years to life of the author plus 70 years. As the world leader in the export of intellectual property, this has potential serious trade implications for the United States.
The United States and EU nations are all signatories of the Bern Convention, which includes the so-called rule of the shorter term. Under that rule, as many of you know, a member country need only extend protection of a work of foreign authors to the extent that they would be protected in their own country. Therefore, U.S. works will only be granted copyright protection for the shorter life plus 50-year term before falling into the public domain.
The main reasons for this extension of term are fairness and economics. If the United States does not extend to Americans the same copyright protection afforded their counterparts in Europe, Americans will have 20 years less protection than their European counterparts, 20 years during which time Europeans will not be paying Americans for their copyrighted works. EU countries are huge markets for U.S. intellectual property, and the United States would lose millions of dollars in export revenues. Any imbalance would be harmful to the United States and would, therefore, work a hardship on American creators and their families.
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In La Cienega, the ninth circuit interpreted the pre-1978 copyright law to mean something contrary to a long history of rulings in the second circuit and Copyright Office practice, placing the copyright protection of a large number of valuable musical works at risk.
Before 1978, a work was required to include a notice of copyright when published in order to receive protection. Under the law as upheld by the second circuit and as interpreted by the Copyright Office, the distribution of a phonorecord did not constitute a publication of the work contained therein, and, therefore, no notice of copyright on record covers was deemed necessary for the musical work owned by the songwriter.
In La Cienega, the ninth circuit held that recordings are indeed copies of musical compositions, and that unless pre-1978 recordings bear the required copyright notice, they enter the public domain immediately upon their sale to the public. This poses a great inequity, it seems to me, to owners who justifiably relied upon judicial and Copyright Office decisions stating that an unregistered recording of a musical composition before 1978 does not constitute a publication for copyright purposes.
Legislation to restore the law to what it was before the decision of the Ninth Circuit Court of Appeals is urgently needed. This is even more apparent with a recent ruling in a Nashville district court which followed La Cienega. In that case the court held that four musical works, and potentially 38 more at issue in the case, had fallen into the public domain.
Page 7 PREV PAGE TOP OF DOC Finally, we will explore the issue of copyright per program licenses. The three performing rights societies, ASCAP, BMI, and SESAC, hold the performance rights to basically all music owned by songwriters that is protected by copyright. Music users must get a license from them in order to publicly perform music or risk being in violation of copyright law. ASCAP and BMI, according to the consent decree under which they operate, must offer a ''per program license'' in addition to ''blanket licenses.'' Many of you are familiar with this.
Today we will explore the question as to whether or not the performing rights societies' licensing practices are in compliance with the consent decrees by offering a meaningful per program license and feasible access to the societies' repertoires.
The issue of music licensing involving restaurants and other public commercial areas of activity will be addressed in more detail at a subsequent hearing scheduled next month in Washington.
I am now pleased to introduce for an opening statement the gentleman from Massachusetts Mr. Delahunt.
Mr. DELAHUNT. Thank you, Mr. Chairman. Let me acknowledge the warm hospitality and particularly the shirt that says, ''Tennessee sounds good to me.'' I want to reassure the Governor and my friend and highly-respected and hardworking colleague Bob Clement that I will enjoy wearing that T-shirt on the beaches of Cape Cod and Martha's Vineyard and Nantucket.
It is a pleasure to be here with Howard Coble, my good friend and my chairman from North Carolina. I seem to have within 6 months progressed from a freshman Democrat to ranking member of this subcommittee. That is because no other Democrat was able to come, unfortunately. So I will certainly do all I can to hold up my end of the discussion. I do look forward to reporting my observations back to our colleagues on the Intellectual Property Subcommittee and the full Committee on the Judiciary.
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Being relatively new to both the subcommittee and the intellectual property world, I want to reassure everyone that I approach these issues with an entirely open mind. Having said that, however, I share the predisposition of many of my colleagues on this subcommittee that one's creative labors are entitled to a fair return, whether the fruits of those labors take a physical form or not.
Mr. Weiss, whom we will hear from shortly, points out in his written statement that enhanced copyright protections have a favorable impact on our balance of trade. A number of witnesses describe how these protections furnish an incentive for creativity. Both arguments seem to me to have validity. But to me it is fundamentally a question of fairness.
The overarching premise of copyright law is that those who enrich our culture with the fruits of their intellect are no less entitled to be compensated than those who create more tangible products, be they skyscrapers or computers or five-star meals. That is ultimately what is at stake in regard to the three questions that we will consider this afternoon: First, whether Congress should provide to U.S. copyright holders the 20 years of additional copyright protection accorded to their counterparts in Europe; second, whether Congress should enact legislation that restores the copyright protection for works composed prior to 1978 that the Ninth Circuit Court of Appeals obliterated in the La Cienega decision; and lastly, whether Congress should prescribe the terms negotiated between the performing rights societies and those who wish to make use of copyrighted music.
In one sense, it is appropriate that we consider these issues today. We can extend the term of copyright protection, yet unless we correct the situation created by La Cienega, thousands of composers will have nothing to extend, and the issue of music licensing has a direct bearing on the extent to which these same composers will derive any benefit from the additional copyright term. On the other hand, I hope very much that we will consider each of these provisions on its merits rather than delaying the length for copyright holders in the effort to resolve all of these questions simultaneously.
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I look forward to hearing from our witnesses and want to congratulate you, Mr. Chairman, on having brought together so much talent and expertise in one room. Thank you very much.
Mr. COBLE. I thank the gentleman.
I am now pleased to recognize the gentleman from Wisconsin, Mr. Jim Sensenbrenner.
Mr. SENSENBRENNER. Thank you very much, Mr. Chairman, and I would like to thank you for holding this field hearing to discuss several important copyright issues currently pending in Congress. Throughout consideration of these issues, we will hear a great deal about upholding the integrity of intellectual property protections. We will be told that some who seek changes to these laws do so purely from a profit motive at the expense of upholding traditional standards of copyright protection. We will also be told by many of the same people that we ought to be flexible enough to alter copyright laws to extend protection because certain properties whose copyrights are due to expire are still generating profits for their owners.
Regardless, I have an open mind about copyright term extension, and I look forward to today's panel on that issue as well as the panel concerning the implications of the ninth circuit decision in La Cienega v. ZZ Top. However, I want to reserve the bulk of my statement to the issue to be discussed in today's third panel, copyright per program licenses, because it is an issue I have been involved with for several years.
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The per program license is a simple concept. Broadcasters who play a very limited amount of licensed music ought to pay less to the music licensing societies than music format stations. Broadcasters who play a large amount of licensed music throughout their broadcast day purchase a blanket license covering all licensed material offered by a society. The overwhelming majority of radio stations fall into this category. Stations playing less or no licensed material ought to pay a licensing fee roughly proportional to the amount of licensed music they broadcast.
It seems to me if you play less licensed music, your license ought to cost less, not a terribly difficult notion. However, in the eyes of ASCAP and BMI, this simple issue of fairness has been elevated to the level of abstraction in order to obfuscate their obligations under the law and to increase their bottom line. The judicial consent decree under which the licensing societies operate requires that an affordable and viable alternative to the blanket license be made available. Its availability is at best illusory because of the disingenuous manner in which the licensing societies have structured their payment schemes. Under the existing system, broadcasters are often forced into purchasing the blanket license from both the principal societies, ASCAP and BMI. This blanket license covers all the material in the society's repertoire, despite the fact that specialty broadcasters in most cases play minuscule amounts of licensed material, much of which is incidental because it is included in advertisements, jingles and the like.
Defenders of the current system will claim a per program license is available and less costly than the blanket license. A license requiring a station playing less than 2 percent licensed material to pay nearly 25 percent of what a station that plays continuous licensed music 24 hours a day does not, in my view, constitute a viable and affordable alternative. Religious and other nonmusic format broadcasters have been fighting this battle in the courts for the better part of two decades.
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Right now I am waiting for a response from the Department of Justice concerning its efforts to enforce the terms of the consent decree. Meanwhile, I have come to the conclusion that it is absolutely essential for the Congress to clarify the antitrust decree to ensure that the monopolist licensing societies abide by its terms as a matter of law. Religious and specialty broadcasters recognize their obligation to pay for licensed music and will still pay for performances of licensed material whether that material is of a religious nature or not. However, this payment ought to reflect the amount of licensed material included in a broadcast.
ASCAP and BMI have flagrantly abused their monopoly power to avoid living up to their legal obligation to provide a viable and affordable alternative to the blanket license. This has been affirmed in the courts when television broadcasters challenged the societies. Now we are in the midst of a conceivably endless season of litigation so religious and specialty radio broadcasters might be treated fairly as well. These broadcasters, most of them small operations, do not have the resources to fight the licensing monopolies in endless litigation at the New York rate court.
Finally, as the licensing societies' coffers expand, religious broadcasters pay fees in excess of what they owe. I fear a portion of the licensing fees extracted from religious broadcast stations may surreptitiously end up in the royalty checks of such morally objectionable artists as Snoop Doggy Dog and Marilyn Manson. Religious broadcasters should in no way be forced to contribute to the fortunes of performers who mock religious values or who perform obscene and often blasphemous works. Last year ASCAP took action to protect religious broadcasters from contributing to such performers. I am unconvinced whether this action is legitimate or merely a shell game to escape the political heat.
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Congress enacted copyright laws, and Congress has the obligation to act when these laws are so lacking in clarity that abuses such as those I have just discussed take place. Until Congress acts accordingly, licensing societies will continue to get the mine, while religious and specialty broadcasters get the shaft. Please forgive me for quoting an old country and western hit, and I will be glad to pay any royalty that is due.
I would like again to thank Mr. Coble for holding this hearing and look forward to the subcommittee's continued involvement in the critical area of copyright law reform.
Mr. COBLE. I thank the gentleman.
[The prepared statement of Mr. Sensenbrewner follows:]
PREPARED STATEMENT OF HON. F. JAMES SENSENBRENNER, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN
Let me thank Chairman Coble for holding this field hearing to discuss several important copyright issues currently before Congress.
Thoughout consideration of these issues we will hear a great deal about upholding the integrity of intellectual property protections. We will be told that some who seek changes to these laws do so purely out of profit motive at the expense of upholding traditional standards of copyright protection. We will also be told, by many of the same people, that we ought to be flexible enough to alter copyright laws to extend protections because certain properties whose copyrights are due to expire are still generating profits for their owners. Regardless, I have an open mind about copyright term extension and look forward to today's panel on that issue as well as the panel concerning the implications of the Ninth Circuit decision in La Cienega v. ZZ Top.
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However, I will reserve the bulk of my statement to the issue to be discussed in today's second panel, copyright per program licenses, because it is an I have been involved with for several years.
The per program period license is a simple concept. Broadcasters that play a very limited amount of licensed music ought to pay less to the music licensing societies than music format stations. broadcasters that play a large amount of licensed music throughout their broadcast day purchase a blanket license covering all licensed material offered by a society. The overwhelming majority of radio stations fall into this category. Stations playing less, or no licensed material, ought to pay a licensing fee roughly proportional to the amount of licensed music they broadcast. If you play less licensed music, your license ought to cost lessnot a terribly difficult notion. However, in the eyes of ASCAP and BMI, this simple issue of fairness has been elevated to the level of abstraction in order to obfuscate their obligations under the lawand increase their bottom line.
The judicial consent decree under which the licensing societies operate requires that an affordable and viable alternative to the blanket license be made available. Its availability is at best illusory because of the disingenuous manner in which the licensing societies have structured their payment schemes. Under the existing system, broadcasters are forced into purchasing the blanket license from both of the principal societies, ASCAP and BMI. The blanket license covers all material in the societies' repertoire despite the fact that specialty broadcasters in most cases play minuscule amounts of licensed material, much of which is incidental because it is included in advertisements, jingles and the like. Defenders of the current system will claim a per program license is available and less costly than the blanket license. A license that requires a station playing less than two percent licensed material to pay nearly 25% what a station that plays continuous licensed music twenty-four hours a day does not, in my view, constitute a viable and affordable alternative.
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Religious and other non-music format broadcasters have been fighting this battle in the courts for the better part of two decades, spending millions of dollars. I am right now waiting for a response from the Department of Justice concerning its efforts to enforce the terms of the consent decree. Meanwhile, I have come to the conclusion that it is absolutely essential for Congress to clarify the antitrust decree to ensure that the monopolist licensing societies abide by its terms as a matter of law. the days of the ASCAPBMI unregulated monopoly are coming to a close.
The licensing societies' recruitment of religious songwriters as stalking horses against my bill certainly cannot relate to the per programming period provisions of the Fairness in Music Licensing Act. Religious and specialty broadcasters recognize their obligation to pay for licensed music and will still pay for performances of licensed material whether that material is of a religious nature or not. However, this payment ought to reflect the amount of licensed material included in a broadcast. ASCAP and BMI have flagrantly abused their monopoly power to avoid living up to their legal obligation to provide a viable and affordable alternative to the blanket license. This has been affirmed in the courts when television broadcasters challenged the societies. Now we are in the midst of a conceivably endless season of litigation so religious and specialty radio broadcasters might be treated fairly as well. These broadcasters, most of them small operations, do not have the resources to fight the licensing monopolies in endless litigation at the New York Rate Court.
Finally, as the licensing societies' coffers expand, religious broadcasters pay fees in excess of what they owe. I fear a portion of the licensing fees extracted from religious broadcast stations may surreptitiously end up in the royalty checks of such morally objectionable artists as Snoop Doggy Dogg and Marilyn Manson. Religious broadcasters should in no way be forced to contribute to the fortunes of performers who mock religious values and perform obscene, often blasphemous works. Last year ASCAP took action to protect religious broadcasters from contributing to such performers. I am unconvinced whether this action is legitimate or merely a shell game to escape political heat.
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Congress enacted the copyright laws and Congress has the obligation to act when these laws are so lacking in clarity that abuses such as those I have just discussed take place. Until Congress acts accordingly, licensing societies will continue to get the mine, while religious and specialty broadcasters get the shaft. Please forgive me for quoting an old country music hit. If necessary, I will gladly pay any royalty due.
I would again like to thank the Chairman for holding this hearing and look forward to the subcommittee's continued involvement in the critical area of copyright law.
Mr. COBLE. Now I am pleased to recognize your Congressman.
Bob, do you share Nashville with another Congressman?
Mr. CLEMENT. I have got all of Nashville.
Mr. COBLE. You all are stuck with this gentleman, then. I say that in jest. Congressman Clement from Nashville.
STATEMENT OF HON. BOB CLEMENT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENESSEE
Mr. CLEMENT. Thank you, Chairman Coble. It is great to have you and Congressman Sensenbrenner and Congressman Delahunt here from the Subcommittee on Courts and Intellectual Property. I am very pleased that you are having this field congressional hearing.
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I might say to Chairman Coble, he is a big fan of our kind of music. I will never forget several years ago having a special reception for Roy Acuff at the U.S. Capitol, and the first one there was, Chairman Howard Coble from North Carolina. And so the three of us had our picture made together, Roy Acuff, Howard Coble, and myself, and we both have it in our offices at the U.S. Capitol.
From the hallowed halls of the Ryman Auditorium to 16th Avenue, music has made Nashville a world famous destination. Country music embodies the spirit of the American people and the genuine feelings individuals experience throughout life. It is an integral part of our American musical heritage, and its popularity continues to grow. Nashville is proud to be the home of country music, and we are proud to celebrate other musical forms, too, from rock, to pop, to gospel.
Today the committee will be hearing testimony on copyright term extensions, copyright per program licenses, and the effect of pre-1978 distribution of recordings containing musical compositions. All of these issues directly impact the music industry. While I was disappointed to learn that the most contentious matter, the so-called Fairness in Music Licensing Act, would not be discussed today, I look forward to the opportunity to address this issue.
I want to especially thank the songwriters, the publishers and music industry professionals in attendance today for showing their support for the rights of music creators.
Page 17 PREV PAGE TOP OF DOC Elvis Presley once said, ''I learned early in life that without a song, the day would never end. Without a song, a man ain't got a friend. Without a song, the road would never bend. So I'll keep singing the song.''
Thank you, Mr. Chairman.
Mr. COBLE. The meeting will come to order. I thank you, Mr. Clement.
[The prepared statement of Mr. Clement follows:]
PREPARED STATEMENT OF HON. BOB CLEMENT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE
I would like to take this opportunity to welcome you to Music City, U.S.A. I am pleased that Chairman Coble and the Judiciary Subcommittee on Courts and Intellectual Property recognize the incredible significance of copyright protection.
From the hallowed halls of the Ryman Auditorium to 16th Avenue, music has made Nashville a world-famous destination.
Country music embodies the spirit of American people and the genuine feelings individuals experience throughout life. It is an integral part of our American musical heritage and its popularity continues to grow.
Nashville is proud to be the home of country music, and we are proud to celebrate other musical forms too, from rock to pop to Gospel.
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Today the committee will be hearing testimony on copyright term extensions, copyright per program licenses, and the effect of pre-1978 distribution of recordings containing musical compositions. all of these issues directly impact the music industry.
While I was disappointed to learn that the most contentious matterthe so-called ''Fairness in Music Licensing act''would not be discussed today, I look forward to the opportunity to address this issue.
I want to especially thank the songwriters, publishers and music industry professionals in attendance today for showing their support for the rights of music creators.
Elvis Presley once said: ''I learned early in life that without a song the day would never end; without a song a man ain't got a friend; without a song, the road would never bend. So, I'll keep singing the song.''
Mr. COBLE. I was not going to quote songs, but since Bob and Jim both did, let me do this.
Mr. Williams, believe it or not, you and Mr. Murphy are going to get recognized. Some years ago, Tom T. Hall, the popular balladeer, the popular country storyteller, wrote a song entitled ''The Ballad of $40.'' He recorded it, the Osborn brothers recorded it, Sonny and Bob, and others as well. For the benefit of the uninformed, the lyrics portray a scene at a cemetery where a funeral service is about to commence. An old boy, in the classic sense of the rural South, is observing nearby, and this old boy then directs his attention to a car in the funeral procession and remarks: That must be the widow in the car, and would you take a look at that? My, what a pretty dress. You know, some women do look good in black. He ain't even in the ground, and they tell me that his truck is up for sale. They say she took it pretty hard, but you can't tell too much behind a veil.
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Now, folks, we are not in Nashville today armed with veils. This is not an exercise in deception. We are here to listen, to learn, and hopefully help resolve these very significant issues.
I am pleased to introduce the first panel. Mr. Ed Murphy, who is the president and chief executive officer of the National Music Publishers' Association, Inc. NMPA is a trade association representing more than 600 American music publishers. Mr. Murphy joined NMPA as executive vice president in September 1983; was elected president of the Harry Fox Agency, Inc., in 1984; and president and CEO of NMPA and HFA in 1985.
Our second witness on panel one is Paul Williams, who is a songwriter, testifying on behalf of the American Society of Composers, Authors and Publishers, and the National Music Publishers' Association. Mr. Williams, perhaps many of you know this, has written some of the classic songs of our time. They include such standards as ''We Have Only Just Begun,'' ''Just an Old-Fashioned Love Song,'' ''Rainy Days and Mondays,'' and ''I Won't Last a Day Without You.'' His awards in the music arena range from Golden Globes to Grammies and Academy Awards.
We are pleased to have each of you here. But, gentleman, I want to ask you a favor if it is not imposing too severely. We have two more panels to appear, and we have two events to attend after we hear all the testimony. We live by the 5-minute rule in Washington. Your entire statements will be made a part of the record and will be read in its entirety. But if you all could keep your oral testimony to on or about 5 minutes, it will be of great help.
I will also ask the members of the panel up here to confine our questions to 5 minute. If you violate the 5-minute rule, you won't be keel-hauled, but I will at least let you know when 5 minutes has expired.
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So, Mr. Williams, you or Mr. Murphy, either way it goes.
STATEMENT OF PAUL WILLIAMS, SONGWRITER, ON BEHALF OF AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, AND THE NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.
Mr. WILLIAMS. Thank you, Mr. Chairman.
Good afternoon, Mr. Chairman and members of the subcommittee. I will be brief. I have been brief since birth.
Mr. Chairman, members of the subcommittee, Governor, honored guests, fellow songwriters and music publishers, I thank you. My name is Paul Williams. I want to thank you for the opportunity to appear before you today. I especially wish to thank Chairman Coble, which rhymes with noble, any songwriter will tell you, for his kindness.
Mr. COBLE. If you want to write a song to that effect, you have my permission.
Mr. WILLIAMS. Beyond that, Mr. Chairman, I will give you half rights, if you will just give me an extra 6 minutes.
Mr. Chairman, I am an actor. I do speak in public regularly. I am here today as a songwriter and as a music publisher. I am privileged to address you on behalf of the National Music Publishers' Association, the NMPA, and its licensing subsidiary, the Harry Fox Agency.
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I can assure you that the three issues before the subcommittee today are of enormous concern to all songwriters and music publishers. I have been asked to focus on one of these issues, only one, which both touches and troubles me deeply, and that is the threat of loss of copyright in songs released on records before 1978. We call that the La Cienega problem.
My home in Los Angeles, incidentally, has a view of La Cienega Boulevard. It is smack in the middle of my view. I can see all the way from downtown Los Angeles to the ocean. It is a gorgeous view. Lately every time I take in that view, it sends a chill up my spine because in the center of it is La Cienega Boulevard. I become frightened not because of the breathtaking beauty of the site, but because it is a painful reminder that much of the creative work I have produced during my career and the work of tens of thousands of other talented colleagues is at risk, suddenly at risk. I was an active songwriter before 1978, and some of the songs I wrote during those years are among my most popular. So I find myself squarely in the cross hairs of the La Cienega decision. The income I earn from my music, my livelihood, is threatened.
As Ed Murphy will explain, the ninth circuit decision in La Cienega Music v. ZZ Top changed the rules of the copyright game for writers and music publishers. Without warning, songs that came from our minds and our hearts, and our hard labor, songs we believed were ours and our families' for the duration of their copyrights, stand to lose their copyright protection. That kind of loss can ruin families.
As I understand it, the copyright law passed by Congress in 1909 required creators and copyright owners to jump through a certain number of technical hoops in order to receive and maintain their copyright protection. Among these hoops was the requirement that, quote, ''copies,'' unquote, of works include a form of copyright notice, the word ''copyright'' or a copyright symbolthat wonderful little C with the circle around itthe word ''copyright'' or copyright symbol; the name of the copyright owner; and, for published works, the year of first publication. If copies were sold without the notice, the ax fell. The work entered the public domain and was no longer the property of its creator.
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For decades, the music industry complied with the law by making sure that visually perceptible copies of music, and that is, of course, sheet music, had a proper copyright notice. That is what authorities in the business, the Federal Court of Appeals for the Second Circuit and the U.S. Copyright Office, all believed the law required. And we all did this. Recordings of music from which the song could be heard but not seen usually did not include a copyright notice for the music. Again, the authorities agreed that notice was not required on recordings. In fact, the U.S. Copyright Office would not even accept a recording as a deposit copy of a published song. I bet there are a bunch of the songwriters here who tried to send tapes in to copyright something when we were new to this. It was sent back to us and told, no, you can't do that.
Unbelievably, nearly 90 years after the 1909 Copyright Act went into effect and nearly 20 years after it was replaced by a vastly rewritten copyright regime, the Ninth Circuit Court of Appeals decided that our industry, other Federal courts, and the Copyright Office had it wrong all along. We should have, since the beginning, treated all recordings as copies. And because we should have known what we could not possibly have known, we face loss of our copyrights and our incomes. It makes me cry. It just terrifies me to think about it.
Mr. Chairman and members of the subcommittee, this decision represents a gross injustice. It hurts people who created music that is loved by Americans and an eager public around the world. We have done nothing wrong. We have done nothing wrong as it relates to this issue. We simply complied with the law as we and others, including the U.S. Government, understood it. And for this we are being told that our works can be deprived of protection.
Page 23 PREV PAGE TOP OF DOC The injustice is compounded because there is simply nothing we can do to change the harsh outcome under La Cienega. The ninth circuit decision expressed the view that a musical work entered the public domain when a recording without copyright notice was sold to the public. I cannot, for example, turn back the clock to 1976 and force those who recorded my song ''Evergreen'' to reissue the recordings with a copyright notice. No lyricist or composer can go back and make things right. Not even Barbra Streisand, my talented cowriter on ''Evergreen,'' has the capacity to do that kind of time travel. We can't do it.
It hurts, too, that the loss of copyright threatens only American songwriters. This is amazing to me. In 1988, Congress passed a law that restores copyright in foreign works from most countries in cases where those works have fallen into the public domain in the United States because of running afoul of the technical requirements of the old copyright law.
It is to me absolute proof that we are the good guysexcuse me, you are the good guys; back to the days of Jimmy Stewart and ''Mr. Smith Goes to Washington,'' if there is something wrong, we are going to take care of it for you. That is what this is telling me. The interesting thing is that if I were a South Korean songwriter or if I were a songwriter from Scotland, there would be no issue here. You have justifiably already taken care of those songwriters. Now all we are asking is that you take care of us as well.
I am forced to ask you, then, the questions that trouble me. What purpose is served by punishing innocent American songwriters? What goal is served by retroactively depriving individuals of their property? Our copyright law today no longer requires copyright notice. I take this as a demonstration that Congress no longer believes that the draconian penalty of forfeiturethat is good enough to be read twicethe draconian penalty of forfeiture of copyright for failure to comply with rigid notice requirements is a good idea.
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I wish I could convey to you how personal this threat of loss is. Real people are facing havoc in their lives and hardship for their families. In a way it is like getting a foreclosure notice on your house when you have made absolutely every mortgage payment on time.
I am a member of ASCAP, yes. I am also a very proud member of the National Songwriters' Association International, and the National Academy of Songwriters. For the record, I would like to say that outside this small courtroom, the halls are overflowing with songwriters who care about this issue. They are here to be heard. I am really honored to be able to speak for them. I am joined by many in this room and outside for whom songwriting is our life's work. That is to say, it is our life, but it is also our work. The royalties we earn on songs we have written pay our bills, put our kids through school, enable us to plan for retirement. Without our copyrights we will be economically devastated.
We urgently need your help. All three of the issues desperately need your attention today. La Cienega, copyright term extension, and music licensing affect songwriters deeply. Each has an impact on our livelihoods, and we care about every one, but the La Cienega decision must be fixed and fixed soon.
The major music markets of Europe have recently moved to extend the term of copyright protection to the life of the author plus 70 years. American music enjoys enormous popularity abroad, but we will not be given the benefit of the longer term unless the United States adopts life plus 70 protection as well.
Page 25 PREV PAGE TOP OF DOC The assault on music creators embodied in H.R. 789 must be deflected. There is nothing fair about denying songwriters payment for the use of their property by restaurants and other commercial businesses. These are issues that other people are going to deal with. I am here to speak with you specifically about La Cienega.
In closing I would like to thank Chairman Coble and Mr. Bono for their leadership in sponsoring bills to correct the La Cienega decision. Songwriters and music publishers desperately need your support to pass the La Cienega correction. Prompt legislative action is absolutely necessary to restore the integrity of our property rights.
Two songs that I have written come to mind right now. Elvis was in the room earlier. Elvis is still in the room. His presence is everywhere we go in this wonderful State. In the late 1960's, early 1970's I wrote a song called ''Where Do I Go From Here,'' that Elvis recorded. I have got to tell you, to be able to walk around and see that little name Paul Williams underneath that big name Elvis Presley was one of the most wonderful, proud moments of my life. Now I have to ask the question, where do I go from here? There is nothing else I can do. I offer this now to you. Truly the lyrics ''I Won't Last A Day Without You'' must apply to you right now in the process that I am trusting is going to save us. We need your help. I really thank you for listening to me today.
Mr. COBLE. Thank you, Mr. Williams.
[The prepared statement of Mr. Williams follows:]
PREPARED STATEMENT OF PAUL WILLIAMS, SONGWRITER, ON BEHALF OF AMERICAN SOCIETY OF COMPOSERS, AND THE NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.
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Good afternoon, Mr. Chairman and members of the Subcommittee. My name is Paul Williams. I thank you for the opportunity to appear before you, and I especially wish to thank Chairman Coble for his kind introduction.
I am an actor, and I do quite a bit of public speaking, but I am here today as a songwriter and a music publisher. I am privileged to address you on behalf of the National Music Publishers Association, Inc. (''NMPA'') and its licensing subsidiary, The Harry Fox Agency, Inc. I can assure you that the three issues before the Subcommittee today are of enormous concern to all songwriters and music publishers.
I've been asked to focus on one of these issues, which both touches and troubles me deeply, the threat of loss of copyright in songs released on records before 1978. We call it the La Cienega problem.
My home has a view of La Cienega Boulevard, which is a major thoroughfare in Los Angeles. Lately, every time I take in that view, it sends a chill up my spine. Not because the sight is breathtaking, but because it is a painful reminder that much of the creative work I've produced during my career, and the work of tens of thousands of talented colleagues, is at risk.
I was an active songwriter before 1978, and some of the songs I wrote during those years are among my most popular. So I find myself squarely in the cross hairs of the La Cienega decision. The income I earn from my music, my livelihood, is threatened.
Page 27 PREV PAGE TOP OF DOC As Ed Murphy explained, the Ninth Circuit decision in La Cienega Music Co. v. ZZ Top changed the rules of the copyright game for writers and music publishers. Without warning, songs that came from our minds and our heartssongs that we believed were ours and our families for the duration of their copyrightsstand to lose their copyright protection. That kind of loss can ruin families.
As I understand it, the copyright law passed by Congress in 1909 required creators and copyright owners to jump through a lot of technical hoops in order to receive and maintain copyright protection. Among these hoops was the requirement that ''copies'' of works include a form of copyright noticethe word copyright or a copyright symbol; the name of the copyright owner; and, for published works, the year of first publication. If copies were sold without the notice, the ax fell. The work entered the public domain and was no longer the property of its creator.
For decades, the music industry complied with the law by making sure that visually perceptible copies of musicthat is, sheet musichad a proper copyright notice. That is what authorities in the business, the Federal Court of Appeals for the Second Circuit, and the U.S. Copyright Office all believed the law required. Recordings of music, from which the song could be heard, but not ''seen,'' usually did not include a copyright notice for the music. Again, the authorities agreed that notice was not required on recordings. In fact, the U.S. Copyright Office would not even accept a recording as a deposit copy of a published song.
Unbelievably, nearly 90 years after the 1909 Copyright Act went into effect, and nearly 20 years after it was replaced by a vastly rewritten copyright regime, the Ninth Circuit Court of Appeals decided that our industry, other Federal courts, and the Copyright Office had it wrong all along. We should havesince the beginningtreated all recordings as copies. And because we should have known what we could not know, we face loss of our copyrights and our incomes.
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Mr. Chairman and members of the Subcommittee, this decision represents a gross injustice. It hurts people who created music that is loved by Americans and an eager public around the world. We have done nothing wrong. We simply complied with the law as weand others, including the U.S. governmentunderstood it. And for this, we are being told that our works can be deprived of protection.
The injustice is compounded because there is simply nothing we can do to change the harsh outcome under La Cienega. The Ninth Circuit decision expressed the view that a musical work entered the public domain when a recording without copyright notice was sold to the public. I can't, for example, turn back the clock to 1976 and force those who recorded my song ''Evergreen'' to reissue the recordings with a copyright notice. No lyricist or composer can go back and make things right.
It hurts, too, that the loss of copyright threatens only American songwriters. In 1988 Congress passed a law that restores copyright in foreign works from most countries in cases where those works have fallen into the public domain in the U.S. because of running afoul of the technical requirements of the old copyright law.
I am forced to ask you, then, the questions that trouble me. What purpose is served by punishing innocent American songwriters? What goal is served by retroactively depriving individuals of their property? Our copyright law today no longer requires copyright notice. I take this as a demonstration that Congress no longer believes that the draconian penalty of forfeiture of copyright for failure to comply with rigid notice requirements is a good idea.
Page 29 PREV PAGE TOP OF DOC Our nation benefitseven thrivesfrom protecting copyright. The International Intellectual Property Alliance, of which NMPA is a part, reports that copyright-based businesses in 1994 contributed 3.78 percent of the Gross Domestic Product and $53.25 billion in foreign sales and exports. NMPA estimates that pre-1978 music generates $1.2 billion in publisher revenues. What sense does it make to sacrifice our portion of these positive contributions, when there is no countervailing social benefit to be gained?
There is no credible ''other side'' of the La Cienega issue. You will not be visited in your offices by a coalition of record pirates and other potential defendants in copyright infringement lawsuits. But if you are looking for potential beneficiaries of the confusion generated by the La Cienega decision, they are unauthorized users of music. We know that there are some folks out there who would move in to exploit pre-1978 music, refuse to pay for its use, and then challenge the copyright owner to take them to court, where they will argue that the song they expropriated is in the public domain.
Today, writers of music and their publishers are afraid to go to court. Because the risk of pursuing a bad guyan infringeris the risk of having a court find that your work is no longer yours.
I wish I could convey to you how personal this threat of loss is. Real people are facing havoc in their lives and hardship for their families. In a way, it's like getting a foreclosure notice on your house when you've made absolutely every mortgage payment on time. But it's not like losing just any house. Because you designed it, built it and in every way made it what it is.
Page 30 PREV PAGE TOP OF DOC I am a member of ASCAP. I am joined by many in this room for whom songwriting is our life's work. That is to say, it is our life, but it is also our work. The royalties we earn on songs we've written pay our bills. Put our kids through school. Enable us to plan for retirement. Without our copyrights, we will be economically devastated. We urgently need your help.
All three of the issues before the Subcommittee todaythe La Cienega decision, copyright term extension and music licensingaffect songwriters deeply. Each has an impact on our livelihoods, and we care about every one. But the La Cienega decision must be fixed, and fixed soon.
The major music markets of Europe have recently moved to extend the term of copyright protection to the life of the author plus 70 years. American music enjoys enormous popularity abroad, but we will not be given the benefit of the longer term unless the U.S adopts life-plus-70 protection, too. But it is painful to remember that, so long as the La Cienega cloud remains over music copyrights, songwriters will not enjoy the benefits of term extension. You can't add 20 years to a copyright that arguably doesn't exist.
And the assault on music creators embodied in H.R. 789 must be deflected. There is nothing ''fair'' about denying songwriters payment for the use of their property by restaurants and other commercial businesses. But again, we must make crystal clear as a matter of law that pre-1978 music remains the property of its writers and publishers.
In closing, I'd like to thank Chairman Coble and Mr. Bono for their leadership in sponsoring bills to correct the La Cienega decision. Songwriters and music publishers desperately need your support. Prompt legislative action is absolutely necessary to restore the integrity of our property rights.
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Please, help us now.
Mr. COBLE. Mr. Murphy.
Folks, I agree that that was a good testimony, but I would ask you to hold your applause. We are on a short leash today, and time is very important. I would appreciate it if you could withhold the applause until the end of the hearing.
STATEMENT OF EDWARD P. MURPHY, PRESIDENT AND CEO, NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.
Mr. MURPHY. Thank you, Mr. Chairman and members of the subcommittee. In an effort to save some time, and I think since Mr. Williams eloquently put forth our position in many different ways, I would just like to reemphasize in a few minor points and cut my testimony down in deference to everyone else that has to speak.
I think you understand, Mr. Coble, and the committee understands the seriousness of the problem that we face on the La Cienega issue and what we all believe to be the way to proceed. I think just to dramatize the issue we might compare it to a problem with real estate, when all of a sudden you wake up to find that your real estate is gone through no fault of your own and how many people are affected and would be affected by such a disaster.
Page 32 PREV PAGE TOP OF DOC But I think it is important to put the dollars into perspective here. We are talking about an industry that globally collects about $6 billion a year. That is the total money that publishers and songwriters collect on a worldwide basis. The pre-1978 works that we are talking about are in jeopardy. We have calculated the potential loss from La Ceinega at $1.2 billion annually. That is the amount of money that will be displaced each year for the next 25 years, on average, based upon the length of copyright protection allotted for pre-1978 works. That is a tremendous sum of money, I think we can agree on.
It is unbelievable what it would do to songwriters and their families, what it would do to this Nation, what it would do to the balance of trade, and certainly what it would do in our representations to the world that we care about intellectual property. It would seem to be the most grievous harm that we could do not only financially, but to our image on a worldwide basis.
Congress has done so much good for us in the past in helping to protect American music. Forty percent of the music heard on this planet today is American music. It is people like Mr. Paul Williams and many thousands of American writers who would be affected negatively by this if we don't correct the problem and correct it now.
I appreciate the Chairman Mr. Coble and Mr. Sonny Bono for presenting the bill. We honor and respect what you have done for us. We ask the rest of the subcommittee to please help us on this issue. It is something that has to be done now. I hope it can be dealt with separately and not as a part of any other bills that are moving through Congress, because this is such a dire problem. It is not a debate about rates. It is not a debate about extending benefits or taking away benefits. This would entirely remove all income. Essentially part of the entertainment industry could collapse, and it would truly collapse. The Register of Copyrights, as you know, has written to you about this. The U.S. Copyright Office supports the La Cienega fix. I think most everybody would like this corrected. I am speaking to the converted in many ways.
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I will cut it here. We do support, obviously, the other measures that are before you and the other bills that are before you, and we will do everything in our power to help move the term extension bill through, and we hope that this debate that is going on now on the fairness in licensing bill can lead to a satisfactory conclusion. But I think the La Cienega issue should be dealt with on a separate basis and done speedily as possible, or we are all really into major problems. Pirates are already taking advantage of this problem. We have not come forward publicly, and we will if necessary, but the pirates are the ones that are taking advantage of the loopholes that have been created by La Cienega. We need your help, and we need it now.
Thank you, Mr. Chairman.
Mr. COBLE. Thank you.
[The prepared statement of Mr. Murphy follows:]
PREPARED STATEMENT OF EDWARD P. MURPHY, PRESIDENT AND CEO, NATIONAL MUSIC PUBLISHERS' ASSOCIATION, INC.
Thank you, Mr. Chairman and members of the Subcommittee. My name is Edward P. Murphy. I serve as President and Chief Executive Officer of the National Music Publishers Association, Inc. (''NMPA'').
NMPA appreciates this opportunity to present its views on a legislative issue of vital concern to songwriters and music publishers: the invitation to music piracy presented by the Ninth Circuit's decision in La Cienega Music Co. v. ZZ Top. 1 The La Cienega problem is currently addressed in two bills pending before the Subcommittee, H.R. 1967, introduced on June 19 by Chairman Coble, and H.R. 1621, sponsored by Mr. Bono. My statement also briefly addresses the issues of copyright term extension and the impact of proposals to limit or eliminate the responsibility of certain commercial users of music to pay public performance fees.
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NMPA AND ITS MEMBERS
NMPA is a trade association representing more than 600 U.S. music publishersbusinesses that own and administer copyrights in musical compositions. The Harry Fox Agency, Inc. (''HFA''), an NMPA subsidiary, serves as licensing agent for more than 17,000 music publishers in connection with the use of music in the United States in records, tapes, CDs and online delivery. HFA also licenses music on a worldwide basis for use in multimedia productions, films, commercials, television programs, and all other types of audio-visual applications.
Music publishers, generally speaking, are holders of copyright in musical works. They play a key role in making American music available to the public in the United States and around the world. Some music publishers are subsidiaries of large entertainment companies. Thousands more, however, are small and medium-sized businesses. In fact, it is increasingly common for established songwriters to serve as their own publishers, and to set up businesses for that purpose.
The music business has major hubs here in Nashville, in Los Angeles and in New York. But you can find active music publishing enterprisesand successful as well as aspiring songwritersin Miami, Detroit, Atlanta, Austin, Chicago, San Antonio, and hundreds of other placesbig and smallacross the country.
LA CIENEGA MUSIC CO. V. ZZ TOP THREATENS COPYRIGHT PROTECTION FOR PRE-1978 AMERICAN MUSIC
Page 35 PREV PAGE TOP OF DOC I am here today to explain why the business of our nation's music publishers and the life's work and livelihoods of the tens of thousands of songwriters they represent are at risk as never before.
What is the problem? Imagine for a moment that title to all of the real estate on Music Row here in Nashville is suddenly seized, without any compensation to the landowners. Imagine, too, the disruptions and hardship an action of that magnitude would cause for the businesses located there, for the people who would be sure to lose their jobs and their incomes, and for their families. And think of the ripple effect that would be felt across the community those businesses serve. Now imagine that disastrous impact multiplied a hundred times over, hitting innocent individuals and businesses across the country.
On January 10, 1995, the U.S. Court of Appeals for the Ninth Circuit, in a case called La Cienega Music Co. v. ZZ Top, leveled a blow that powerful at the music industry, and we re still reeling. The La Cienega decision is at odds with industry practice. It rejects long-established interpretations of the 1909 Copyright Act. And it ignores the views and registration practices of the U.S. Copyright Office. Nonetheless, it is the law in the Ninth Circuit, and a Federal District Court here in the Sixth Circuit recently embraced it.2
For as long as La Cienega and decisions following it are allowed to stand, the very existence of copyright protection for American music produced before 1978 is in jeopardy. And more than one billion dollars each year in music publisher revenues is at stake. Today, American writers and music publishers are facing loss of their copyrights for having done nothing more than comply with the law as it was understood at the time.
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How could this happen? The answer lies in understanding the ''formalities,'' or technical requirements necessary to secure and maintain copyright protection that characterized the U.S. system under the Copyright Act of 1909, and the use of the terms ''copy'' and ''publication'' as they were applied under the old law.
WRITERS AND PUBLISHERS ARE BEING SEVERELY PENALIZED BY NEW INTERPRETATIONS OF AN OLD LAW
Under the 1909 Copyright Act, Federal copyright protection would be lost forever, and a work would fall into the public domain, if ''copies'' of the work were sold or offered to the public without copyright notice in the required form.3 Given the state of technology in 1909, the term ''copy'' was understood to mean a visually perceptible copy. For musical compositions, that meant sheet music, which enjoyed enormous popularity at the time.
Music industry practice developed in accordance with the law. Copies of musical workssheet musicwere marked with copyright notice in the form required by the 1909 Act. Recordings typically bore no copyright notice for the music included on them, because it was accepted and understood that recordings did not have the status of copies. The industry followed this practice for 80 years.
In January 1995, the Ninth Circuit changed the law. It decided that selling recordings of musical compositions constituted ''publication'' of the recorded music under the 1909 Act. The real threat to our industry comes, however, because the court also said that recordings were ''copies'' under the 1909 Act and that, unless the recordings included copyright notice in the required form, the musical compositions lost copyright protection immediately upon the sale of the recordings to the public.
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Our good faith understanding of the law, shared by the courts and the Copyright Office, was that recordings were not copies of musical compositions and that, therefore, they did not need to include copyright notice in order to preserve copyright protection for the work. In practice, recordings rarely bore copyright notice for the composition. As a result, La Cienega has the potential to punish the writer and publisher of virtually every song that was recorded in America before 1978.
And it must be remembered that neither the songwriter nor his or her publisher could dictate that copyright notice appear on recordings. Most recordings of music were (and still are) made and distributed pursuant to the compulsory mechanical license provisions of the copyright law. Neither the 1909 Copyright Act itself, nor related Copyright Office regulations, required recording companies to include copyright notice for musical works on recordings distributed to the public.
In a recent letter to Chairman Coble, our respected Register of Copyrights, Marybeth Peters, stated the nature of the La Cienega problem clearly. She said:
This draconian forfeiture [of copyright in pre-1978 musical works] will occur because of new judicial interpretations of a law no longer on the books, despite the fact that the copyright owners have done nothing wrong, but complied with the law as it was understood at the time. In our view, the new judicial interpretations are based on a lack of understanding of the technical meanings of the concepts of copies and publication in the 1909 Act.
Page 38 PREV PAGE TOP OF DOC Needless to say, we believe the Register is correct.
THE RULE IN LA CIENEGA IS WRONG AND SHOULD BE PROMPTLY CORRECTED
Congress did not directly address the question of whether fixations of music that could be heard, but from which the music could not be visually perceived, were ''copies'' for purposes of the 1909 Act. Provisions in the 1909 Act itself, and laws subsequently enacted by Congress, make clear, however, that recordings were not ''copies.''
Of course, in 1909, today's recorded music formatsthe vinyl LP, audio cassette and CDdid not exist. In fact, the hottest technology for getting music into the home was the piano roll. The 1909 Copyright Act contained special licensing provisions relating to the manufacture of piano rolls, but the reproductions were referred to as ''mechanical'' reproductionsnot ''copies.''
When Congress extended Federal copyright protection to sound recordings in 1971, the law made clear that phonorecords constituted copies only of the sound recording, and not of the musical compositions on the recording. Consistent with this action, the 1976 Copyright Act required notice only on visually perceptible copies of works and on phonorecords of sound recordings. There was absolutely no requirement that a recording of a musical composition needed to include a separate copyright notice for the music.
Over the lifetime of the 1909 Copyright Act, publishers and songwriters did not merely rely on their own interpretation of the law to guide their practices. When questions concerning the concepts of ''copy'' and ''publication'' arose, they were litigated by our industry. And, we believed, they were resolved. In 1976, the Second Circuit squarely supported industry practice in Rosette v. Rainbo Record Manufacturing Corp.,4 which held that the sale of recordings did not constitute publication of the musical compositions on those recordings under the 1909 Act, and that such recordings did not need to include copyright notice for the compositions.
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Moreover, the registration practices of the U.S. Copyright Office fully supported the established view that recordings were not copies under the 1909 Act and that distribution of recordings did not constitute publication under the Federal statute. As the Register of Copyrights has explained in letters to the Subcommittee, the Office consistently refused to register copyright in a musical composition as a published work where the registration was sought based on a recording embodying the composition. The Office, instead, would advise applicants that, to be registered as a published work, visually perceptible copies of the workthat is, sheet music copieshad to have been sold or offered to the public. Where only recordings had been sold, the Office would suggest registration of the musical composition as an unpublished work.
The Ninth Circuit, in La Cienega, has chosen to ignore the intent of the 1909 Copyright Act, established legal precedent, industry practice, and the views and practices of the Copyright Office. If the result were merely bad law, that would be bad enough. But, as I said in the beginning of my testimony, the impact is far more profound. Hundreds of thousands of music copyrightsfrom Gershwin and Irving Berlin to Motown, from the standards of the big band era to rock-and-roll, from contemporary classical music to jazzall are at risk unless and until this injustice is corrected.
LA CIENEGA PUNISHES ONLY AMERICAN WRITERS
There is an additional, and often-overlooked, element of unfairness in the impact of the La Cienega decision. Only American music is faced with loss of copyright. Foreign works by writers from countries that are members of the Berne Convention for the Protection of Literary and Artistic Works (''Berne Convention''), even if threatened with public domain status, are eligible for copyright restoration under provisions of the Berne Convention Implementation Act of 1988.5 As a result, foreign authors and copyright owners will be assured of continued protection, in spite of La Cienega, while their American counterparts could have their property stripped away.
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And, sadly, American writers could be deprived of their copyrights on a global basis. American music accounts for 40 percent of the music heard and enjoyed around the world. American music publishers and writers today earn more than half of their royalty income outside the United States. Nothing in either of the major copyright treaties that serve as the basis for foreign protection of U.S. copyrightsthe Berne Convention or the Universal Copyright Conventionrequires other nations to protect American works that are in the public domain here. Other countries are free to deny protection for works that are not protected at home. And they can hardly be expected to do otherwise.
The La Cienega rule has the potential not only to destroy the value of important American copyrights in the United States, but also to eliminate a significant portion of the positive contribution to our nation's trade balance that global enthusiasm for American music generates.
THE LA CIENEGA RULE ENCOURAGES PIRACY AND DISRESPECT FOR COPYRIGHT
NMPA is often asked who is on the other side of the La Cienega issue. The answer is no one. Or at least no one who is likely to come forward. For now, the principal beneficiaries of the conflict between the Second and ninth circuits are outright pirates and bootleggers. It is only a matter of time before the thieves learn that the state of the law could greatly reduce the risk of their illegal enterprises.
The La Cienega decision gives parties who would use music without authorization a new and powerful defense. Today, if a copyright owner pursues an infringement action against an unauthorized user of his work, at least in Ninth and now the Sixth Circuit, he runs the risk of losing his copyright. The alleged infringer can seek to have the action dismissed because the work alleged to be protected by copyright is in the public domain. And we have seen that the alleged infringer can win.
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As a consequence, we are beginning to fear a chilling effect on the ability of copyright owners in pre-978 music to bring enforcement problems to court.
La Cienega legislation needs to have been passed yesterday. I cannot over-emphasize the importance of prompt congressional action to so many innocent people. In the recent case of Mayhew Music Co. v. Gusto Records, Inc.,6 pursuing an alleged infringer cost the plaintiff four copyrights and placed more than 30 others at risk. Widespread reliance by record pirates and other infringers of music copyrights is only a matter of time. It is fairer to everyone for Congress to correct the problem now.
THE LA CIENEGA RULE ADVANCES NO RATIONAL POLICY OBJECTIVE
If new judicial interpretations of what constituted publication under the 1909 Copyright Act are allowed to stand, tens of thousands of American songwriters will lose the value and income from all or part of their life's work. Thousands of music publishers will see the assets of their businesses and catalogues depleted, and in some cases, devastated. And America will see some most renowned examples of 20th Century music and culture made available to be appropriated by others around the world, without recognition of the creator or compensation to the author and his or her family.
Even if it could be argued that the Ninth Circuit's rule in La Cienega makes some sense, what possible prospective public policy objective is served by depriving individuals and businesses of their property? There is no way that a writer or publisher whose work was made available on recordings prior to 1978 can go back in time and undo what was done. If the music was distributed on a recording that did not bear copyright notice for it, the Ninth Circuit says the copyright is lost. Andat least for American worksthere is no means to restore it.
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Over the past decade, Congress has repeatedly shown its desire to abandon copyright formalities and the severe penalties that could befall a creator or copyright owner for failure to comply. Most significantly, in 1988, in anticipation of the U.S. joining the Berne Convention, Congress eliminated the requirement that copies of works bear a copyright notice as a condition to maintaining copyright protection. It also eliminated the requirement of copyright registration as a prerequisite to filing an infringement actionat least for foreign nationals of Berne Convention countries.7 And, in the Copyright Renewal Act of 1992, Congress ended the practice of requiring the filing of a renewal registration to secure the full term of copyright protection available under the law.8 Allowing retroactive judicial imposition of formalities is contrary to the direction in which Congress has taken the copyright law.
As the Register of Copyrights has noted,
Regardless of whether or not [new judicial interpretations of ''copy'' and ''publication''] are correct, however, they lead to unfair results when adopted retroactively today. The rationale [behind the new interpretations] is based on policy grounds relating to appropriate incentives for copyright owners' behaviorbut since the  statute no longer applies to new acts, concepts of future incentive are meaningless.
We urge the Subcommittee, in the strongest terms, to reject a rule that can only hurt, not help, and to act with the greatest possible speed to remove this threat to our industry.
Page 43 PREV PAGE TOP OF DOC In closing my remarks on this subject, I must acknowledge the leadership Chairman Coble and members of the Subcommittee have already demonstrated in dealing with it. Last year, provisions identical to those in H.R. 1967, Chairman Coble's bill to correct the La Cienega decision, were approved by the Subcommittee as part of a copyright technical corrections bill. The full Judiciary Committee approved the language, and it passed the House of Representatives without objection.
As I said a moment ago, the La Cienega correction, to our knowledge, has no substantive opposition. We are aware, however, that some would seek to hold La Cienega legislationor any copyright bill, for that matterhostage to their demands for unrelated changes in the copyright law. We urge you to deal with the La Cienega issue alone, and on its merits.
H.R. 1967 and other bills that would correct the La Cienega decision are not about new rights. They are not about extended rights. The bills simply assure creators and owners of music copyrights that they continue to own their property. The bills restore a long-established rule of law, nothing more. And they do so to no one's detriment and at no one's expense.
America's songwriters and music publishers need your help to preserve their copyrights, their incomes and their businesses. We urge the Subcommittee to approve a La Cienega correction at its earliest opportunity, and to support prompt enactment of this crucial legislation.
COPYRIGHT TERM EXTENSION
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NMPA wishes to express its unqualified endorsement of the statements submitted by representatives of the songwriter community, the performing rights organizations, and other copyright industry groups in support of copyright term extension. We also wish to thank and commend Congressmen Bono and Gallegly for their leadership in this area.
As I said in my discussion of the La Cienega issue, American music enjoys enormous popularity around the world. According to figures compiled by the International Intellectual Property Alliance, of which NMPA is an active member, the core copyright industries, including music, in 1995 accounted for a staggering $53.25 billion in foreign sales and exports, surpassing every other export sector except automotive products and agriculture.
With the world hungry for American music and other creative American works, it should be beyond question that the levels of protection here must keep pace with those of other copyright respecting countries.
The United States over the last decade has established itself as a leader in forging international consensus on strengthened norms for copyright protection. In the movement to extend the duration of copyright, however, Europe has taken the lead. And it has done so in a way calculated to deprive Americans of the benefit of extended protection.
The European Union's 1995 directive harmonizes the term of copyright among its member states at the lifetime of the author plus 70 years, and follows the Berne Convention's ''rule of the shorter term.'' The rule is a notable exception to the Berne Convention's general policy of national treatment. In essence, it allows a country to protect a foreign work for only as long as it is protected in its country of origin.
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International law provides that we must grant an extended copyright term if we wish to received the benefits of it in other markets. It is in the interest not only of the affected industries, but also of our overall trade posture, that Congress promptly enact term extension legislation.
NMPA also fully supports the statements of our songwriter and performing rights organization colleagues who will describe for the Subcommittee the unfairness of the so-called ''Fairness in Musical Licensing'' bills.
The music licensing bills deal with commercial relationships between owners of property and users of that property. It should surprise no one that disputes will, from time to time, arise in this context. What is surprising, is that operators of commercial, religious music format radio stations, and other commercial enterprises that use music to attract and to satisfy their customers, should look to Congress to resolve business questions.
NMPA continues to hope that representatives of the music users will return to the bargaining table and work out reasonable license agreements with the various performing rights organizations. Congress can and should continue to encourage this process. But as we go forward, we should remember, once again, that the world is watching.
In testimony submitted for the record of a May 1996 Small Business Committee hearing on music performance rights licensing issues, NMPA warned that legislative proposals similar to those currently reflected in H.R. 789 could have serious implications for U.S. compliance with existing international obligations and for the ability of music creators and copyright owners to continue to receive fair treatment in foreign markets. We cautioned, in particular, that an expansion of the exemption from infringement liability contained in section 110(5) of the Copyright Act was likely to exceed the scope of permitted exceptions under the Berne Convention.9
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It appears U.S. trading partners share this concern. On June 11, 1997, the European Commission announced that its was launching an investigation based on a complaint by the Irish Music Rights Organization that the existing 110(5) exemption and any broadened exemption, such as that proposed in H.R. 789, adversely affect the cross-border licensing of Irish music, and violate U.S obligations under Article 9 of the World Trade Organization Agreement on the Trade Related Aspects of Intellectual Property Rights and Article 11 of the Berne Convention.
The U.S.more than any other countrydepends on strong and effective protection of copyrights worldwide. We cannot continue to lead in an area so important to our national economy if legal protections currently in place here are allowed to be eroded.
We urge you to reject H.R. 789.
Thank you, Mr. Chairman and members of the Subcommittee for hearing NMPA's views on these important subjects. I am pleased to respond to your questions.
1 53 F.2d 950 (9th Cir. 1995).
2 Mayhew Music Co. v. Gusto Records, U.S. Dist. Ct., M.D. Tenn., Nos. 3:940134, 3:940233 (April 4, 1997).
3 For published works, proper notice included the word ''copyright'' or an acceptable substitute, the name of the copyright owner, and the year of first publication.
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4 354 F. Supp. 1183 (S.D.N.Y.), aff'd per curiam, 546 F.2d 461 (2d Cir. 1976).
5 Act of October 31, 1988, Pub. L. 100568, 102 Stat. 2853.
6 Supra note 2.
7 Act of October 31, 1988 (''Berne Convention Implementation Act of 1988''), Pub. L. 100568, 102 Stat. 2853.
8 Act of June 26, 1992 (''Copyright Renewal Act of 1992,'' being Title I of the ''Copyright Amendments Act of 1992''), Pub. L. 102307, 106 Stat. 264.
9 Music Licensing and Small Business, Hearing Before the House Committee on Small Business, 10476, 104th Cong., 2d Sess. (May 8, 1996).
Mr. COBLE. Gentlemen, you all will be pleased to know that I have introduced a piece of legislation that will fix this problem. If it passes, it won't please a judge in the ninth circuit and a district court judge in Nashville who ruled against you. My bill would restore the interpretation of pre-1978 copyright law as it applies to this situation. As each of you pointed out, you all were complying with instructions from the Copyright Office and the second circuit, so your hands were clearly clean.
Page 48 PREV PAGE TOP OF DOC Mr. Murphy, let me ask you a question. If Congress did nothing to legislate a remedy to the La Cienega problem, who would stand to benefit?
Mr. MURPHY. The only people who can and will are the pirates. We have a number of copyright piracy situations that we are monitoring.
Unfortunately, as a result of La Cienega, we are not able to bring court actions in California; we are not able to bring them here in Nashville. This is a very, very serious issue, and we don't know that other courts may have some other matters pending of a similar nature. We have already had the Mayhew case, the La Cienega case, and there may be others. This is extremely serious. I can't think of anything else that has been more important for Congress to move on in the intellectual property area over the last decade or more.
Consider that we are trying to correct problems created, if you will, 80 years ago. No one intended it that way; it is just the way the courts interpreted it. But certainly when Congress first acted long ago, no one could conceivably agree that a copyright notice was to be placed on a recording to protect the underlying composition.
My organization licenses recordings in America, and we license over 300,000 songs a year on a compulsory basis. It is impossible, literally impossible, for a songwriter or a publisher to even ask that a circle C be put on a phonorecording. We license on an automatic basis. Our principlals don't even know a recording is out there.
Mr. COBLE. Mr. Williams, let me ask you a practical question. As a songwriter, do you have any control, as a practical matter, over what is printed on the phonorecord cover?
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Mr. WILLIAMS. I have enough trouble trying to get a free copy of the record. Just to get the words properly printed on the liner notes is an absolute triumph.
The thing that I would also like to say is that the system has worked so wonderfully. When I walked into my first publishing officewhich was Rondor Musicas an absolute neophyte, I knew nothing about the law. The laws worked for me. The copyright laws protected me when I was an absolute beginner: A reputable publishing company working with the law as it stood, and all of a sudden I am still OK 25, 30 years later. This fix is desperately needed to provide for other young songwriters to have the same kind of protection as they waltz into this business.
Mr. COBLE. Thank you, sir.
The gentleman from Wisconsin, Mr. Sensenbrenner.
Mr. SENSENBRENNER. Thank you very much, Mr. Chairman.
I have two very quick questions that are more of a technical nature. As you know, the House of Representatives unanimously passed in the last Congress legislation that fixed the La Cienega question, and it never was acted upon by the Senate, so that is why we are talking about this here today. Do either of you know if there was a petition for certiorari filed in the Supreme Court after the ninth circuit decision?
Mr. MURPHY. Yes, sir.
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Mr. SENSENBRENNER. And they turned it down?
Mr. MURPHY. Yes, they did.
Mr. SENSENBRENNER. I am a bit puzzled, Mr. Murphy, because your testimony says that the second circuit held the opposite way. Usually when different circuits come up with different opinions or different decisions, the Supreme Court takes jurisdiction to resolve it so that we have a uniform national law. Do you know why they didn't do it?
Mr. MURPHY. No, I don't, sir. I think it is always interesting to speculate why the Supreme Court does or does not accept certiorari on any numbers of cases. But we do thinkand I think it is important to notethat the second circuit has been considered, I think, by all the experts to be the definitive circuit in terms of intellectual property. Of course, we have been guided by the Copyright Office, which has told us how to operate and what to do for many, many years.
Mr. SENSENBRENNER. People ought to learn not to rely on advice they get from the Government. Just ask folks who have been told by the IRS what to put on their tax return and then get stung by an audit 2 years later.
Mr. MURPHY. I suppose that is right. But I think in this particular instance we have a whole litany of dangers, and we have talked about really 80 years of compliance by creators and copyright owners.
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Mr. SENSENBRENNER. I understand that, and I am sympathetic to and supportive of your position, but I am wondering why there has not been a legal remedy when there are apparently conflicting decisions by the circuits. We have got this decision that recently was handed down by the sixth circuit. Is that still appealable to the Supreme Court or not?
Mr. MURPHY. I don't believe so. It is not yet appealable. I think it might be also important to note that we asked the Register of Copyrights asked to file an amicus petition with the Supreme Court on La Cienega, and they were denied. They were denied that by the Justice Department.
Mr. COBLE. Will the gentleman yield?
Mr. SENSENBRENNER. I yield for a minute.
Mr. COBLE. Jim, I think the Tennessee case did not advance beyond the district court. I don't think it went to the circuit.
Mr. MURPHY. It has not. It is still at the trial level. We would not want to comment on something that is still pending. What we knew happened is that the Copyright Office did want to file a petition with the Supreme Court in the La Cienega case, and it was denied permission by the Justice Department at that time.
There are many factors as to why the Supreme Court does or does not do something, whether the Supreme Court would consider one district or circuit correct against another, but the fact is what Congress intended. That is what we are here to discuss, what Congress intended and what, in fact, can be done.
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Mr. SENSENBRENNER. I think we all know and agree what Congress intended in 1978.
Mr. MURPHY. 1909.
Mr. SENSENBRENNER. 1978 is when the law was changed. I will concede 1909, too.
The other question that I haveand, again, it is technical and legalI don't know the answer to it. Is it possible for the Congress to retroactively restore a copyright to matter that has fallen into the public domain?
Mr. MURPHY. I think that once the courts have adjudicated on a certain matter like what they have with La Cienega, I think it is extremely difficult. I think it may be impossible in regard to a U.S. work. I think that is why we are here to try to correct this problem immediately. Once the courts have adjudicated, you can't revive the dead. When that American copyright is gone, it is gone.
I think it is important that we now rectify this devastating threat. We have an opportunity to save American culture. I think we ought to move on it and move on it real quick. It is time for Congress to act and move the responsibility over to the Senate side.
Mr. SENSENBRENNER. Thank you.
Page 53 PREV PAGE TOP OF DOC Mr. COBLE. I thank the gentleman.
The gentleman from Massachusetts, Mr. Delahunt.
Mr. DELAHUNT. Thank you, Mr. Chairman.
Mr. Murphy, you don't belong to a very exclusive club if you become confused by some of the decisions and actions of the Supreme Court. Again, in response to the rationale as to why the U.S. Supreme Court did not grant certiorari, I am simply befuddled by that myself. Maybe we wouldn't be here today, but that is the case, and we will have to deal with it.
I think in responseand I think I heard from Mr. Williams during the course of his testimonyin response to Mr. Sensenbrenner's question about the retroactive application of any law that would be passed by Congress, we in fact have already done thatat least I think that is what I heard from Mr. Williamsin terms of foreign copyrights.
Mr. WILLIAMS. That is correct. In terms of foreign works.
Mr. DELAHUNT. You referenced the action, the possibility, or it may be the reality, of pirates entering this particular domain. Can you give us any examples and tell us whether you have done any evaluation? Are these efforts domestic or foreign?
Mr. MURPHY. These are domestic pirates, as far as we know, Congressman. We would thinkand it is very difficult to know who really are the owners of many corporations, but it is very clear that there are pirates in America or with access to our markets who are doing this.
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There are any number of specific cases. We have pending right now before our office at least six or more problems or instances which are connected to piracy and misuse of copyright and we cannot bring actions in those States or circuits. We are in a dilemma, as you know, because we don't want to become too public with this issue to make more potential pirates aware of the larger problem. We will, and we will perhaps as time moves on if we are not able to correct this. But there is a serious, serious problem here.
Mr. DELAHUNT. Let me just ask one other rather simple question. My understanding is, the Copyright Office agrees that the problem ought to be fixed.
Mr. MURPHY. Absolutely.
Mr. DELAHUNT. Is there anybody disagrees with that position?
Mr. MURPHY. No, sir, I don't believe there is anybody in Congress or otherwise who would disagree with it. We just hope that this legislation can be placed on a fast track. The magnitude of the problem here is astounding.
Mr. DELAHUNT. Let me assure youand I do agree with you, Mr. Murphy, I think that this particular issue, again, because of the immediacy of it and the pressing need, ought to be treated separately and differently than any other issue.
Let me indicate to the chairman that I am willing to work with him, to sign on to his bill, I am sure along with Bob Clement, your Representative, to work hard among our colleagues in Congress, both Republican and Democratic, to see that this gets to the President's desk and is signed.
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Mr. MURPHY. Thank you, sir. We are very grateful.
Mr. COBLE. The gentleman from Tennessee, Mr. Clement.
Mr. CLEMENT. Mr. Williams, Mr. Murphy, we are pleased to have you here at this most important hearing.
Copyright infringement is said to be much more widespread than one might suspect. How does the La Cienega ruling help the growing number of companies that pirate illegal tapes and use unlicensed copyrights, and what effect does this have on the music industry?
Mr. MURPHY. The effect is a rippling effect. It not only deprives incomes of songwriters and publishers but also the recording companies.
The legitimate recording companies, they will do what they have to do and abide by the law. But we have a number of other companies who will go out there and use these loopholes to take away sales in legitimate markets from those people and companies that are doing what they should. Even though the reputable people know right now that they can probably try to do the same they don't do that.
So the amount of money, it is hard to tell you in precise numbers. I hope I don't have the ability to tell you really what happens. We want to prevent this problem from growing. This is a cancer we have in the music industry that must be corrected and corrected immediately.
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Mr. CLEMENT. Mr. Williams.
Mr. WILLIAMS. I have no further comments. I have heard wonderfully encouraging comments from the committee, and I am just pleased to have been heard today. Thank you.
Mr. COBLE. Gentlemen, thank you all for being with us.
I will now call our second panel, and I will introduce them as they come forward. The first witness is Fritz Attaway, who is the senior vice president and general counsel of the Motion Picture Association of America, where he has been since 1976.
Our second witness is George David Weiss, one of America's greatest songwriters and president of the Songwriters Guild of America, the oldest and largest songwriter organization. It would be hard for anyone to have missed George's music. His songs have reached music fans around the world, in all categoriespop, rock, soul, jazz, film, and Broadway. Just to name a few of his best known songs: ''The Lion Sleeps Tonight;'' ''Can't Help Falling in Love,'' for Elvis Presley; ''What a Wonderful World,'' for Louis Armstrong; ''Lullaby of Birdland,'' for Ella Fitzgerald; ''That Sunday, That Summer,'' for Nat King Cole and his daughter Natalie; ''Mr. Wonderful,'' for Sammy Davis; ''Oh, What It Seemed To Be,'' for Frank Sinatra; and ''Stay With Me,'' for Bette Midler.
Mr. Weiss, I notice conspicuously absent a bluegrass tune in that list, but I will hold you harmless for that.
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Mr. WEISS. I was born in the wrong part of the country.
Mr. COBLE. All right, sir.
In recognition of his wonderful body of work, Mr. Weiss was inducted into the Songwriters Hall of Fame in 1984.
Our third witness is Ms. Frances Preston, who is president and CEO and a member of the board of directors of Broadcast Music, Inc., the performing rights organization. She joined BMI in 1958 and was named to her current position in 1986. Under her guidance, the organization has grown significantly, to its current membership of more than 180,000 songwriters, composers, and music publishers.
Our fourth witness is Julius Epstein, who is a screenwriter. Mr. Epstein started out as a radio publicist who soon turned to writing one-act plays and, from 1935, screenplays. In 1939, he began a long and fruitful collaboration with his brother, Phillip G. Epstein, which lasted until 1958. They shared Academy Award honors for the screenplay of ''Casablanca'' in 1943 and contributed to the success of many other films of Warner Bros. and other studios. Mr. Epstein won the screenwriters' Laurel Award for Lifetime Achievement, the highest honor given for screenwriting, the UCLA Award for setting a shining example for the screenwriters of the future, numerous awards from universities and colleges, and the Writers Guild of America Foundation Award for Lifetime Achievement.
Our final witness on this panel is Jerome Reichman, a professor at the Vanderbilt School of Law here in Nashville. Professor Reichman has written and lectured widely on comparative and international intellectual property law, and one of his most recent publications is ''The Duration of Copyright and the Limits of Cultural Policy,'' published in the Cardozo Arts and Entertainment Law Journal.
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Mr. Walton, we will start with you. And, again, gentlemen and lady, if you all can comply with the 5-minute rule, we will be appreciative.
Mr. WALTON. Thank you, Mr. Chairman.
I am here as the executive director of the Writers Guild, basically to endorse Mr. Epstein's statement and to answer any questions the committee may have. Perhaps we should go to Mr. Epstein's statement first, Mr. Chairman, if that is agreeable.
Mr. COBLE. That will be fine.
Mr. WALTON. It is my privilege to be here. Thank you for letting me be a late addition to the panel.
Mr. COBLE. You are indeed welcome.
STATEMENT OF JULIUS EPSTEIN, SCREENWRITER AND MEMBER, WRITERS GUILD OF AMERICA, WEST, ON BEHALF OF THE WRITERS GUILD OF AMERICA
Page 59 PREV PAGE TOP OF DOC Mr. EPSTEIN. Good afternoon, Chairman Coble and members of the subcommittee.
My name is Julius Epstein, and I feel privileged to appear before this subcommittee. I am here to comment on the Copyright Term Extension Act of 1997. I speak on behalf of a group of creators left out of the act, creators of movies and television programs made before 1960. I am not a lawyer or a lobbyist. I am a screenwriter. I write movies. I have worked in the movie business now for over 60 years and have written over 50 movies. I was fortunate to receive an Academy Award for the screenplay of ''Casablanca.''
I am here to discuss the impact of the copyright term legislation on a group of American authors and creators who created motion pictures during the so-called golden age, a group who created such classics as ''The Best Years of our Lives,'' ''Sunset Boulevard,'' ''Mr. Smith Goes To Washington,'' ''It Happened One Night,'' and ''High Noon.'' A group that does not receive compensation for their work, even though their movies are shown over and over. A group who will not benefit under the proposed legislation because the legislation gives the copyright owner, and not the actual creator, the additional 20 years of copyright protection. Copyright owners will reap a windfall from the extension even though none of them had any involvement whatsoever with the actual production of the movies.
I would like to talk about those who took movies out of the nickelodeons and turned our movie industry into the second greatest export of the United States and the envy of the world. I am not going to claim that the screenwriters were solely responsible. I will get to that in a moment.
Page 60 PREV PAGE TOP OF DOC First, I would like to acknowledge the contributions of the great actors and actresses: Clark Gable, Jimmy Stewart, Jimmy Cagney, Greta Garbo, Joan Crawford, Norma Shearer, Gene Kelly, John Wayne, Gary Cooper, Bette Davis, Humphrey Bogart, Ingrid Bergman, and the many, many others. No one portrayed the role of an idealistic individual, the common man, the improbable hero bucking the odds and thwarting the schemes of materialistic cynics, better than Jimmy Stewart in ''It's a Wonderful Life.'' Who can forget Gary Cooper standing up against the vengeful outlaws in ''High Noon'' or Bogart as Rick Blaine battling against the Nazis in ''Casablanca.''
The great actors and actresses were directed by equally great directors like William Wyler, John Ford, Fred Zimmerman, George Stevens, Frank Capra, Ernst Lubitsch, David Lean, Michael Curtiz, and Alfred Hitchcock.
Wyler, who directed ''The Best Years of Our Lives,'' ''Jezebel,'' ''Mrs. Miniver,'' ''Ben Hur,'' ''Friendly Persuasion,'' and ''Roman Holiday,'' developed the technique of filming long takes in which characters appear in the same frame for the duration of the entire scene rather than cutting from one to another. The cinematographic style gave audiences the collective experience of holding their breath. The technique required great discipline on the part of actors, who, like Bette Davis, clashed with Wyler. Wyler was nicknamed ''90-take Wyler'' for the many takes he filmed of every shot until he was satisfied that he had achieved a desired effect or nuance.
Orson Welles' ''Citizen Kane'' remains memorable for its original use of the soundtrack, deep focus camerawork, and low-angle compositions, defining the use of the camera for decades.
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Frank Capra celebrated the little guy who defeats the city slickers and the power figures. His victories are ours, achieved through pluck, persistence, and his overwhelming decency, which is matched by the decency of the American people when they see the true situation.
And then there was Mike Curtiz. Curtiz directed ''The Charge of the Light Brigade,'' ''The Adventures of Robin Hood,'' ''Yankee Doodle Dandy,'' ''Casablanca,'' and ''Mildred Pierce.'' He was Hungarian and uniquely slaughtered the English language. On one occasion, he was directing a western and was about to shoot a scene in which wild, riderless horses would gallop furiously away. ''Bring in the empty horses!'' he shouted to his assistant. He never lived that down. Years later, David Niven would title his novel about Hollywood,, ''Bring in the Empty Horses.''
My brother Phil and I did four pictures, including ''Casablanca,'' with Curtiz. In those days, we received our weekly paychecks on Wednesday, and when we had arguments with Curtizand they were manyhe would invariably call us Wednesday bums. I confess there are times now when I wish I was a Wednesday bum again.
All right, then. I have acknowledged the importance of actors and directors of the golden age. But what if there had been no writers, no scripts? Actors could not have acted. Directors could not have directed. Producers could not have produced. Composers could not have composed. Editors could not have edited. Simply put, without the screenwriter, there would have been no movies, no golden age. But, fortunately, there were screenwriters and so there were scripts.
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Mr. COBLE. Mr. Epstein, you are well over the 5 minutes. If you could summarize.
Mr. EPSTEIN. The best case for writers was made unwittingly by Irving Thalberg, regarded as the best producer of all time. He said to his fellow producers, ''The most important part in filmmaking is played by the writers. We must do everything in our power to keep them from finding out.''
And who are the screenwriters that made all of this possible? To begin with, there was Robert Riskin, whose credits include ''It Happened One Night,'' ''Mr. Deeds Goes to Town,'' ''Meet John Doe,'' ''You Can't Take It With You,'' and ''Lost Horizon.'' Without exception, his pictures are celebrated for their decency, their humanity, and their uniquely American values. Riskin's movies, like many from this era, shared a basic faith in the essential goodness of the common man and the inevitable triumph of honesty and justice over selfishness and deceit. As Lionel Barrymore said in ''You Can't Take It With You,'' ''You can't take it with you, Mr. Kirby. So what good is it? As near as I can see, the only thing you can take with you is the love of your friends.''
We have an opportunity to determine Federal copyright policy and decide who benefits from this extension. This group of authors and creators have given so much to our American culture. On behalf of these writers, directors, actors, and actresses, I ask you to recognize their contribution. As a matter of fairness, those who created the copyrighted work should share in the proceeds of this new term.
Page 63 PREV PAGE TOP OF DOC Billy Wilder summed up our situation in his usual elegant style. He wrote, ''This is an era when the studios are granting $90 million severance packages. Writers are asking just enough to buy a little schnitzel.'' May we ask your help in getting the schnitzel for us?
[The prepared statement of Mr. Epstein follows:]
PREPARED STATEMENT OF JULIUS EPSTEIN, SCREENWRITER AND MEMBER, WRITERS GUILD OF AMERICA, WEST, ON BEHALF OF THE WRITERS GUILD OF AMERICA
Good afternoon Chairman Coble, members of the Subcommittee. My name is Julius Epstein and I feel privileged to appear before this subcommittee. I am here to comment on the Copyright Term Extension Act of 1997. I speak on behalf of a group of creators left out of the Act, creators of movies and television programs made before 1960.
I am not a lawyer or a lobbyist. I am a screenwriter. I write movies. I have worked in the movie business now for over 60 years and have written over 50 movies. I was fortunate to receive an Academy Award for the screenplay of Casablanca.
I am here to discuss the impact of the copyright term legislation on a group of American authors and creators who created motion pictures during the so-called ''Golden Age.'' A group who created such classics as ''The Best Years of Our Lives, Sunset Boulevard, Mr. Smith Goes to Washington, It Happened One Night and High Noon.'' A group that does not receive compensation for their workeven though their movies are shown over and over. A group who will not benefit under the proposed legislation because the legislation gives the copyright owner, and not the actual creator, the additional 20 years of copyright protection. Copyright owners will reap a windfall from this extension even though many of them had no involvement with the actual production of the motion picture.
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I would like to talk about those who took movies out of the nickelodeons and turned our movie industry into the second greatest export of the United States and the envy of the world. I am not going to claim that the screenwriters were solely responsible. I will get to that in a moment. First, I would like to acknowledge the contributions of the great actors and actresses: Clark Gable, Jimmy Stewart, Jimmy Cagney, Greta Garbo, Joan Crawford, Norma Shearer, Gene Kelly, John Wayne, Gary Cooper, Bette Davis, Humphrey Bogart, Ingrid Bergman and the many, many others. No one portrayed the role of an idealistic individual, the common man, the improbable hero bucking the odds and thwarting the schemes of materialistic cynics better than Jimmy Stewart in Its a Wonderful Life. Who can forget Gary Cooper standing up against the vengeful outlaws in High Noon or Bogart as Rick Blaine battling against the Nazis in Casablanca.
The great actors and actresses were directed by equally great directors like William Wyler, John Ford, Fred Zimmerman, George Stevens, Frank Capra, Ernst Lubitsch, David Lean, Michael Curtiz and Alfred Hitchcock. Wyler, who directed The Best Years of Our Lives, Jezebel, Mrs. Miniver, Ben-Hur, Friendly Persuasion and Roman Holiday, developed the technique of filming long takes in which characters appear in the same frame for the duration of the entire scene rather than cutting from one to another. The cinematographic style gave audiences the collective experience of holding their breathe. This technique required great discipline on the part of actors, who like Bette Davis, clashed with Wyler. Wyler was nicknamed ''90-take Wyler'' for the many takes he filmed of every shot until he was satisfied that he had achieved a desired effect or nuance. Orson Welles's Citizen Kane remains memorable for its original use of the sound track, deep-focus camerawork and low angle compositions, defining the use of the camera for decades. Frank Capra celebrated the ''little guy'' who defeats the city slickers and the power figures. His victories are ours, achieved through pluck, persistence, and his overwhelming decency, which is matched by the decency of the American people when they see the true situation.
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And there then was Mike Curtiz. Curtiz directed The Charge of the Light Brigade, The Adventures of Robin Hood, Yankee Doodle Dandy, Casablanca and Mildred Pierce. He was Hungarian and uniquely slaughtered the English language. On one occasion, he was directing a western and was about to shoot a scene in which wild, riderless horses would gallop furiously away. ''Bring in the empty horses,'' he shouted to his assistant. He never lived that down. Years later, David Niven would title his novel about Hollywood, ''Bring in the Empty Horses.'' My brother Phil and I did four pictures, including Casablanca, with Curtiz. In those days we received our weekly paychecks on Wednesday and when we had arguments with Curtiz, and they were many, he would invariably call us ''Wednesday Bums.'' I confess that there are times now when I wish I was a ''Wednesday Bum'' again.
All right then, I have acknowledged the importance of actors and directors of the Golden Age. But what if there had been no writers, no scripts? Actors could not have act. Directors could not have directed. Producers could not have produced. Composers could not have composed. Editors could not have edited. Simply put, without the screenwriter, there would have been no movies, no Golden Age. But fortunately there were screenwriters and so there were scripts. Brilliant scripts that became brilliant films. It is ironic that the best case for writers was made unwittingly by Irving Thalberg, regarded as the best producer of all time. He said to his fellow producers, ''The most important part in film making is played by the writers. We must do everything in our power to keep them from finding out.'' And who are the screenwriters that made all of this possible.
To begin with, there was Robert Riskin, whose credits include It Happened One Night, Mr. Deeds Goes to Town, Meet John Doe, You Can't Take It With You and Lost Horizon. Without exception, his pictures are celebrated for their decency, their humanity, and their uniquely American values. Riskin's movies, like many from this era, shared a basic faith in the essential goodness of the common man and the inevitable triumph of honesty and justice over selfishness and deceit. As Lionel Barrymore said in You Can't Take It With You, ''You can't take it with you, Mr. Kirby. So what good is it? As near as I can see, the only thing you can take with you is the love of your friends.''
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There are others. Ernest Lehman wrote North by Northwest, Sabrina, Somebody Up There Likes Me, Sweet Smell of Success. Billy Wilder gave us The Apartment, Some Like It Hot, Double Indemnity, Love In the Afternoon, Sunset Boulevard. Garson Kanin wrote Adam's Rib, Born Yesterday, Pat and Mike. These writers wrote lines that we remember even today. Who can forget Orson Welles's dying word''Rosebud.'' Or Marlon Brando screaming''You don't understand! I could've had class. I could've been a contender'' in On the Waterfront, written by Bud Schulberg. Bette Davis in All About Eve by Joe Mankiewicz''Fasten your seat belts, it's going to be a bumpy night.'' Or Gloria Swanson's comment on silent film stars in Sunset Boulevard, written by Billy Wilder''We didn't need dialogue. We had faces.'' And, may I humbly suggest, you may remember a few lines from Casablanca.
What is also unique about this group of creators is their undying support of our country. This love of America is not only shown in the kind of movies they created, but in their individual effort during the war. Capra, Wyler, Riskin, Jimmy Stewart, Ronald Reagan and many more enlisted. Riskin left Hollywood at the height of his career to spend four years overseas for the United States Office of War Information. Wyler enlisted in the Air Force and was attached to a bomber group in England. During the war, he made two feature length documentaries about bombing missions over Germany, The Memphis Belle and Thunderbolt. Wyler lost hearing in one ear as a result of high-altitude flying.
When the bomb was dropped at Pearl Harbor, my brother and I were writing the screenplay of Arsenic and Old Lace. Frank Capra was directing. There were about three weeks left on the shooting schedule. Capra shot the movie in one week and was off to Washington where he was commissioned as a major in the Army. He asked Phil and me and a half dozen other screenwriters to join him in an effort our government considered very importantto write a series of films to be called Why We Fight. We, of course, gladly consented. The Studio said, ''No. We have just borrowed Ingrid Bergman from David Selznick to play the lead in Casablanca. There is a stop date in the deal, which means that for every day we need Bergman beyond the stop date, we have to pay Selznick a fortune. We want you to start writing the screenplay of Casablanca immediately. You can't go to Washington.'' But we said we re going and we went. We worked in Washington for four weeks, then returned to Hollywood and Casablanca. Incidentally, I was pleased when just a few weeks ago PBS after more than 50 years, televised several episodes of Why We Fight.
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Well, after we finished rounding up the usual suspects, Phil and I wrote and produced Mr. Skeffington, starring Bette Davis. It was not a pleasant experience. After our daily battles with Miss Davis, I figured that actual warfare would be like a month in the country. I applied for and received a commission as a Lieutenant. After the war ended, Lieutenant Jack Warner and Captain Ronald Reagan stopped making training films and went back to civilian life. After a while, Jack Warner sold the studio and I heard that Ronald Reagan left the movie business too.
You will have an opportunity to determine federal copyright policy and decide who benefits from this extension. This group of authors and creators have given so much to our American culture. On behalf of these writers, directors, actors and actresses, I ask you to recognize their contribution. As a matter of fairness, those who created the copyrighted work should share in the proceeds of this new term.
Billy Wilder summed up our situation in his usual elegant style. He wrote, ''This is an era when the studios are granting 90 million dollar severance packages. Writers are asking just enough to buy a little schnitzel.'' May we ask your help in getting the schnitzel for us? Thank you.
Mr. COBLE. Thank you, Mr. Epstein.
Folks, I dislike being the bad cop, but we are going to have to try to adhere as closely as we can to the 5-minute rule, reiterating the fact that your entire statements will be made part of the record.
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STATEMENT OF FRANCES W. PRESTON, PRESIDENT AND CEO, BMI
Ms. PRESTON. Thank you, Chairman Coble and members of the subcommittee. It is an honor to come before you to testify on the views of BMI songwriters, composers, and music publishers with regard to the extension of the copyright term. It is also a special privilege for me to address this committee today here in Nashville, which, as you know, is better known as Music City, USA, the songwriter capital of the United States.
For this special opportunity, I would like to express my gratitude and that of all the creative community for letting this city be the forum for this important issue. It is not often that this committee comes to America's heartland to hear the true voice of the creative community.
As you know, the current term of a U.S. copyright for most works is the life of the author plus 50 years. We are here today to support the Copyright Term Extension Act of 1997 that would extend the copyright term by 20 years for all works.
BMI represents over 180,000 affiliated songwriters, composers, and music publishers, with more than 3 million works in our repertoire. Our writers have a clear view of the issues at stake because many of them have created music that is not only popular here in the United States but universally acclaimed throughout the world.
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The key issue here for us is the value of copyright and the protection of the creators of music. One must look at the love and the dedication and the devotion and passion that these people all put into their work. A creator has no guarantee of ever making money creating musical works. A creator may work for 10 or 20 years before he or she has a song recorded and has a hit. We need to keep in mind the hardships that creators must bear before they see the fruits of their work, and we should also consider the immense enjoyment that these people bring to humanity.
While the United States has always been the standard bearer on copyright throughout the world, we have let major trading partners get ahead of us in this one area, the term of copyright.
As you know, American intellectual property is now one of the top exports for the United States, and music is leading the way. Our music travels worldwide. When American music is performed in the international market, the American creators benefit, and that is money coming back into the U.S. market. The same holds true for records, films, books, software. Clearly, intellectual property is becoming a more and more important factor in the commercial world.
Because of this shift, it seems only fair that the creators and owners of intellectual property enjoy the same benefits from their life's work as do other property owners. It is only fair that their children and grandchildren should be able to enjoy the fruits of their hard labor and sacrifice. Extending the current term of the copyright in the United States would put the American creators and owners on an equal footing with those in other fields.
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The drafters of the Constitution signaled their intent in drafting article I, section 8, to promote the progress of science and arts. The basis of the proposal was twofold: To create economic incentives for the creators and to grant protection for the works created. These objectives have been met, but with limitations on the duration of protection.
If the United States is to maintain its prominent position as the world's leading source of creativity, it must expand the incentives. It is extremely important to grant American creators and copyright owners this extended incentive to maintain our position of leadership in the creative world. At the moment, American creators are being treated unfairly by their own laws.
It would be ironic for the leader in copyright to stand by and let their own native product fall into the public domain in those very same foreign markets from which we reap such a positive trade benefit.
While the European Union has adopted an additional 20 years for the term of copyright, the United States has not yet done so. The end result is that U.S. copyrighted works will fall into the public domain overseas and other people will exploit the works of American creators in the international market and will find a way to profit from the limitation of the U.S. copyright law. We must make sure that the rewards and benefits come home to the American creators and owners.
Here at home, we face a similar problem as a result of the ninth circuit decision in the La Cienega case. In this case, copyrights are going into the public domain even without the benefit of the 50-year copyright term. So it would truly be a shame if we were to lose hundreds of thousands of great compositions.
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The copyrights in a majority of musical compositions which were written before 1978 are now under threat. In most cases, recordings of musical works have been released without a copyright notice, and the court held in La Cienega that a copyright notice was required because the sale of a record constituted publication. Routinely, records do not contain such a notice because earlier decisions, and even the Copyright Office, had taken the position that the sale of a record was not publication since a record is not a copy.
It is a misconception that taking away one's property by allowing it to go into the public domain would allow free usage for educational and other purposes. An artist can record a song that is in the public domain and get paid for it. A record company may put out that song and get paid for the record. A musician can play the music and get paid. Television and movies will still use the music and get paid. The only ones who do not get paid are the creators and the publishers. This is highly unfair.
It would truly be a shame if literally hundreds of thousands of wonderful musical compositions were to fall into the public domain when copyright owners had every reason to believe that they were in full compliance of the requirements of the copyright law. Accordingly, we strongly support your bill, Mr. Chairman, H.R. 1967, which clarifies that distribution of a record before January 1, 1978, would not constitute a publication of a musical work.
Am I not adhering to the time schedule?
Mr. COBLE. Ms. Preston, as I said, you will not be keel-hauled, but if you could summarize.
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Ms. PRESTON. I certainly will.
I think that most of all what I would want to say is that for us to weaken our U.S. performance rights also on this issue by tying everything together would be as wrong as refusing to match the European Union on term extension, and both moves would only serve to undermine our intellectual property and do damage to our writers and our publishers.
On behalf of the creative community, I strongly urge that the committee move the copyright term extension legislation as quickly as possible, freestanding, and held back by no other legislation, and put the United States back on an even footing with our trading partners.
[The prepared statement of Ms. Preston follows:]
PREPARED STATEMENT OF FRANCES W. PRESTON, PRESIDENT AND CEO, BMI
Chairman Coble, members of the subcommittee, thank you. It is an honor to come before you to testify today on the views of BMI songwriters, composers and music publishers with regard to extension of the U.S. copyright term. It is also a special privilege for me to address this committee today in Nashville, Tennessee, better known as Music City, USA, the songwriter capital of America.
Page 73 PREV PAGE TOP OF DOC For this special opportunity, I would like to express my gratitude and that of all the creative community based in Nashville for letting this city be the forum for this important issue. It is not often that this committee comes to America's heartland to hear the true voice of the creative community. So once again, thank you for your courage and vision in letting Nashville be your host today. As you know, the current term of copyright is, for most works, the life of the author plus 50 years. We are here today to support the Copyright Term Extension Act of 1997 that would extend the copyright term by 20 years for all works.
BMI represents over 180,000 affiliate songwriters, composers and music publishers, with more than 3 million works in our repertoire. Our writers have a clear view of the issues at stake here, because many of them have created music that is not only popular here in the United States, but is universally acclaimed throughout the world.
The key issue here for us is the value of copyright and the protection of the creators of music. One must look at the love, dedication, devotion and passion that these people put into their work. A creator has no guarantees of ever making money creating musical works. A creator may work for ten or twenty years before he or she has a song recorded and have a hit. We need to keep in mind the hardships creators must bear before they see the fruits of their work and we should also consider the immense enjoyment that these people bring to humanity. While the U.S. has always been the standard-bearer on copyright throughout the world, we have let major trading partners get ahead of us in this one areathe term of copyright.
As you know, American intellectual property is now one of the top exports for the U.S. and music is leading the way. Our music travels worldwide. When American music is performed in the international market, the American creators benefit and that is money coming back into the U.S. market. The same holds true for records, films, books, software.
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Clearly, intellectual property is becoming a more and more important factor in the commercial world. Because of this shift, it seems only fair that the creators and owners of intellectual property enjoy the same benefits from their life's work as do other property owners. It is only fair that their children and grandchildren should be able to enjoy the fruits of their hard labor and sacrifice. Extending the current term of copyright in the U.S. would put the American creators and owners on an equal footing with those in other fields.
The drafters of the Constitution signaled their intent in drafting article one, section eight, to promote the progress of science and arts. The basis of the proposal was twofold: to create economic incentives for the creators and to grant protection for the works created. These objectives have been met, but with limitations on the duration of protection. If the united states is to maintain its prominent position as the world's leading source of creativity, it must expand the incentives. It is extremely important to grant American creators and copyright owners this extended incentive to maintain our position of leadership in the creative world. At the moment American creators are being treated unfairly by their own laws.
It would be ironic for the leader in copyright to stand by and let their own native product fall into the public domain in those very same foreign markets from which we reap such a positive trade benefit. While the European Union has adopted an additional twenty years for the term of copyright, the U.S. has yet to do so. The end result is that U.S. copyrighted works will fall into the public domain overseas and other people will exploit the works of American creators in the international market and will find a way to profit from the limitation of the U.S. copyright law. We must make sure that the rewards and benefits come home to American creators and owners.
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Here at home we face a similar problem, as a result of the ninth circuit court's decision in the La Cienega case. In this case, copyrights are going into the public domain even without the benefit of the 50 year copyright term. It would be truly a shame if we were to lose hundreds and hundreds of great compositions. The copyrights in a majority of musical compositions which were written before 1978 are now under threat. In most cases recordings of musical works have been released without a copyright notice and the court held in La Cienega that a copyright notice was required because the sale of a record constituted ''publication.'' Routinely, records do not contain such a notice because earlier decisionsand even the copyright officehad taken the position that the sale of a record was not publication since a record is not a ''copy.'' It is a misconception that taking away one's property by allowing it to go into the public domain would allow free usage for educational and other purposes. An artist can record a song in the public domain for free and get paid, a musician can play the music free and get paid, a record company can record it free and get paid, television and movies will still use the music and get paid. The only ones who don't get paid are the creators and the publishers. this is highly unfair.
It would truly be a shame if literally hundreds of wonderful musical compositions were to fall into the public domain when copyright owners had every reason to believe they were in full compliance of the requirements of the copyright law. Accordingly, we strongly support your bill, Mr. Chairman,H.R. 1967which clarifies that distribution of a record before January 1, 1978 would not constitute a publication of a musical work.
Last year, while this term extension legislation had wide support, it was held hostage because of other issues, primarily the music licensing issue. I can only categorize that action as outrageous, because the music licensing bill for which other legislation was derailed, would put the U.S. in violation of international copyright agreements in an area where we led the way.
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H.R. 789, the music licensing legislation, is an attempt to devalue the worth of current copyrighted propertyproperty that is the main source of income for many a writer and composer in this town and throughout the country. Nashville is home for many people who would be affected by this terrible and unfair legislation. These are good working people who, through their perseverance and dedication, have managed to survive the hardship of an extremely competitive and difficult business. How incredible it would be to give more time to a copyright term, while at the same time taking away the value of the copyrighted work itself. We have already been told by some U.S. trading partners that if the U.S. were to dismantle this portion of our copyright law, they would bring a case against the U.S. at the World Trade Organization [WTO].
For the U.S. to weaken our U.S. performance rights would be as wrong as refusing to match the European union on term extension. both moves would only serve to undermine U.S. intellectual property.
The extension of the current term of copyright in the U.S. is vital not just to the music industry. This applies to all copyright: books, films, computer software. When we are, as a nation, working so hard to bring rogue nations into line on copyright protection, there is a particular irony in our inability to do so at home.
On behalf of all the creative community, I strongly urge the committee to move the copyright term extension legislation expeditiously, free-standing and held back by no other legislationand put the U.S. back on an even footing with our trading partners.
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Mr. COBLE. Thank you, Ms. Preston.
STATEMENT OF GEORGE DAVID WEISS, PRESIDENT, THE SONGWRITERS GUILD OF AMERICA
Mr. WEISS. Thank you, Mr. Coble. I am sure you can't help but notice that this hall is jam-packed with songwriters and the hallways are jam-packed with songwriters, many of them very successful, others still struggling, reaching for the stars. You can see what this means to them, this hearing, so we doubly thank you, sir.
Mr. Chairman and members of the subcommittee, my name is George David Weiss and I am a working songwriter and president of the Songwriters Guild of America, the Nation's oldest and largest purely songwriter organization. On behalf of the more than 5,000 American creators who are SGA members, I want to thank you for inviting me to testify today.
Although my remarks will focus on the importance of passing legislation to extend the copyright term, I think it is important to state for the record that all the issues you are considering today and in the coming weeks are related and are of immense consequence to every songwriter in America.
Enactment of term extension legislation without correcting the problems raised by the disastrous La Cienega decision could leave writers of pre-1978 compositions with no benefit from the extended 20-year term. Similarly, the longer term will be of far less consequence if music licensing legislation has been enacted that limits our ability to earn an income for those extra 20 years.
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Let me turn now to the specific issue of copyright term extension.
SGA's position is straightforward. As a matter of equity, economic self-interest and cultural self-preservation, we believe term extension legislation should be enacted promptly. We are gratified that Mr. Gallegly introduced H.R. 604 early in this Congress and that you, Chairman Coble, were an original cosponsor and you have now moved quickly to hold hearings.
The arguments in favor of term extension are simple but compelling. The most obvious is that extension is in the economic interest of the United States. The European Union has extended its term to life of the author plus 70 years. If the United States does not follow suit, we will lose 20 years of substantial foreign revenues from American intellectual property, the most sought after in the world. America's songwriters and other rights holders will have less protection in Europe than our European counterparts, and our trade balance will suffer accordingly. This makes no sense when the increased protection abroad will cost taxpayers and consumers at home absolutely nothing.
While I believe the economic arguments in favor of term extension are persuasive on their own, as a writer, I must confess I am most concerned about how the failure to pass such legislation will affect our national culture. Many of our most revered American songs, like ''Stars and Stripes Forever,'' ''Over There,'' and ''Swanee,'' have already fallen into the public domain and other great works are very soon to follow.
If we are to foster the genius responsible for such national treasures, we must make certain that writers have the incentive to create. They need confidence that our system of laws will protect their creations and allow them to support their families while they are alive and after they are gone.
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One reason that Congress has previously extended the copyright term was to protect not only the creator but his or her children and grandchildrenthat is, three generations. To some, the current term of protection in the United States must seem like a long enough time to meet this goal. But things have changed, even since the last term extension in 1976. Like everyone, we songwriters are now living longerthank the good Lord and scienceand increasingly many of us are blessed with children later in life. Particularly with respect to older works, these facts strongly militate in favor of a 20-year extension.
Today, unfortunately, copyrights often expire before even one generation of a composer's heirs has benefited. SGA has many estate members, the inheritors of the brilliance of a spouse or parent; they are particularly vulnerable without an extension.
There are innumerable composers whose works never reach their pinnacle of public recognition until after their death. Whether it is because their music is avant-garde or out of sync with what is currently popular, such artists toil in obscurity for most of their creative days. And suddenly, after their death, public recognition and financial rewards abound; too late for the creator but at least in time to nourish their heirsif the duration of protection is sufficient.
I can tell you from my personal experience that it is impossible to predict when in a writer's life or after it a song will become a hit, if at all. Often a song can languish for decades before it gets recognition.
Nearly 30 years ago I wrote ''What a Wonderful World'' for Louis Armstrong. For almost 20 years the song was not a major or even recognizable hit in America. However, it was one of my most cherished copyrights because I so idolized Louis Armstrong. I only hoped that one day it would receive some public recognition.
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Finally, 10 years ago, the song was included in a major motion picture, ''Good Morning, Vietnam.'' As a juxtaposition to the devastation depicted by the movie's screenplay, ''What a Wonderful World'' was sung by Louis Armstrong, creating the counterpoint to the movie's theme. After 20 years, the song finally became a hitin the recording world, as a major motion picture theme and in my performing rights society.
The thousands of my colleagues who struggle to earn a living in this difficult and competitive business must have a reasonable prospect that they can leave a legacy to their children and grandchildren even if their compositions do not become commercially viable for many years. An additional 20-year term of protection will help guarantee that incentive and encourage more talented writers to practice their craft.
Copyright term extension is good for American creators, American consumers and the American economy. In short, it not only represents good public policy, it is the right thing to do. SGA urges its enactment.
[The prepared statement of Mr. Weiss follows:]
PREPARED STATEMENT OF GEORGE DAVID WEISS, PRESIDENT, THE SONGWRITERS GUILD OF AMERICA
My name is George David Weiss and I am a working songwriter. You may recognize some of my music. I co-wrote ''What a Wonderful World,'' recorded by the incomparable Louis Armstrong; ''Can't Help Falling in Love, the Elvis Presley hit (and his theme song); ''The Lion Sleeps Tonight''; ''Lullaby of Birdland'' (with George Shearing); and many others. A more complete biography is attached to my testimony.
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For fifteen years I have been the President of The Songwriters Guild of America (SGA), the nation's oldest and largest organization run exclusively by and for songwriters. SGA is a voluntary association comprised of composers throughout the United States and the estates of deceased members. SGA provides contract advice, royalty collection and audit services, copyright renewal and termination filings, and numerous other benefits to our members. SGA and its Songwriters Guild Foundation are also committed to aiding and educating beginning songwriters through scholarships, grants and specialized Guild programs. SGA has offices in New Jersey/New York and Los Angeles, as well as here in Nashville.
On behalf of the more than 5,000 creators of American music who are members of SGA, I appreciate the opportunity to appear before you today to express our views on copyright term extension legislation as well as two other subjects of immense consequence to all songwritersproposals to overturn recent court decisions that threaten to remove copyright protection for virtually all pre-1978 compositions and music licensing.
SGA's position on these matters is straightforward. As a matter of equity, economic self-interest and cultural self-preservation, we believe copyright term extension legislation should be enacted promptly. As a matter of fundamental fairness and undeniably correct public policy, we believe legislation to overturn the disastrous 1995 decision of the Ninth Circuit in the La Cienega case must be passed immediately. Finally, while SGA supports non-legislative efforts to resolve outstanding administrative issues between our performing rights societies and commercial establishments, we vigorously oppose pending bills that would deny writers compensation when our works are used to benefit bars, restaurants and other business enterprises.
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These issues are inextricably intertwined. Enactment of term extension legislation without correcting the problems raised by the La Cienega court and other decisions could leave writers of pre-1978 compositions with no copyrighted songs that would benefit from the extended 20-year term. Similarly, the longer term will be of far less consequence if music licensing legislation has been enacted that removes our ability to earn an income for those extra 20 years when our compositions are played in retail establishments.
With the caveat that I am a writernot a lawyer, a copyright expert, or an economistlet me now turn to each of these issues separately and try to explain why they are so critical to American creators.
COPYRIGHT TERM EXTENSION
Term extension has been an issue of paramount importance to those of us committed to the protection of American composers and intellectual property for some time. Last month, many of SGA's best-known composers wrote every Member of the House to reiterate our strong support of pending legislation that would extend the copyright term. A copy of that letter is attached to my statement.
We are gratified that Mr. Gallegly introduced H.R. 604 at the outset of this Congress and that Chairman Coble was an original co-sponsor of the bill and has now moved promptly to hold hearings. We also appreciate the support already given to H.R. 604 by others on the Judiciary Committee, notably Mr. Berman, Mr. Goodlatte, Mr. McCollum, Mr. Canady, Mr. Gekas, Mr. Smith, and Ms. Lofgren. Moreover, we want to thank Mr. Bono for introducing H.R. 1621, which also would extend the copyright term. In a letter to Chairman Coble last month, the Administration signaled its support for term extension legislation as well.
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I have offered testimony in favor of an extension on behalf of SGA numerous times in the past four years. In 1993, prior to the introduction of legislation, I expressed strong support for an extension in a proceeding conducted by the Copyright Office. The arguments I made then are still valid today, but developments internationally have made the need to pass legislation even more pressing.
Most importantly, a change in the copyright term in Europe has made the U.S. ''out of tune'' internationally. On July 1, 1995, in line with a 1993 Directive, the European Union harmonized the copyright term in all its member countries at a minimum period of life of the author plus 70 years. This same EU Directive explicitly required that all member states adopt the ''rule of the shorter term'' with respect to the duration of copyright protection for foreign works in their countries. This means that if term extension legislation is not enacted and the current U.S. term of life of the author plus 50 years is not extended, EU countries need not provide copyright protection to American works beyond life-plus 50 years. American songwriters and other rights holders will thus have 20 years less protection in Europe than our European counterparts.
This is not only unfair to the writers I represent, and to other American copyright owners, but it is unwise as a matter of economic self-interest and international trade policy. Let me explain.
It has often been said that the whole world loves American music. Our intellectual property generally is the most sought after abroad and is one of the few bright spots in our balance of trade. According to a report issued in March of this year by the International Intellectual Property Alliance, the core copyright industriesmusical recordings, movies and home videos, television programs, books, and computer softwarerepresent a huge bonanza of foreign sales, totaling over $53 billion in 1995. This surpasses every other export category but the automotive and agriculture sectors. The equation is simple: we are a net exporter of intellectual property products to the EU; if we increase our copyright term to life-plus 70, we will gain an additional 20 years of foreign revenues from the EU and our trade balance will improve in the long term.
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We simply cannot afford to abandon 20 years worth of valuable overseas copyright protection at a time when we face severe trade deficits in so many other areas. This is particularly so when the increased protection abroad will cost taxpayers and consumers at home absolutely nothing.
Beyond the need to protect our writers in international markets and the importance of the resulting revenues, there are additional trade-based reasons to increase our copyright term. In negotiations with foreign countries on intellectual property matters, U.S. representatives have frequently been confronted with the argument that our own law does not provide the highest level of copyright protection. This argument has been used to resist U.S. calls for better protection for American works in foreign countries. If we do not now harmonize our term with the life-plus 70 term of the EU, it is all but certain that U.S. negotiators in the future will be faced with similar claims. If the U.S. is to remain a leader in international copyright and discourage retaliatory trade practices, we must extend our copyright term.
While I believe the economic and trade-related arguments in favor of term extension are persuasive on their own, as a writer I must confess I am most concerned about how the failure to pass such legislation will affect our national culture. Many of our most revered American songs, like ''Stars and Stripes Forever,'' ''Over There,'' and ''Swanee,'' have already fallen into the public domain. Other great works are soon to follow.
If we are to foster the creativity responsible for such national treasures we must make certain that writers are treated fairly and have the incentive to create new works. Those with talent to write need to be nurtured, and in the real world this means giving them some confidence that our system of laws will protect their creations and allow them to support their families while they are alive and after they are gone. By assuring that creators can provide a legacy for their heirs, term extension will help on this score as well.
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One of the principal reasons that Congress has previously extended the copyright term was to protect not only the creator but his or her children and grandchildrenthat is, three generations. To some, the current term of protection in the U.S.life plus 50 years for post-1978 works and a flat 75 year period for most pre-1978 worksmust seem like a long enough time to meet this goal. But things have changed, even since the last term extension in 1976.
Like everyone, we songwriters are now living longer, and increasingly many of us are blessed with children later in life. Particularly with respect to older works, these facts strongly militate in favor of a 20-year extensionif the desired goal of protecting three generations is to be realized. Today, unfortunately, copyrights often expire before even one generation of a composer's heirs has benefitted. SGA has many estate members, the inheritors of the genius of a spouse or parent; they are particularly vulnerable without an extension.
There are innumerable composers whose works never reach their pinnacle of public recognition until after their death. Herman Hupfeld (''As Time Goes By''), Vincent Youmans, and Charles Ives are just three examples. Whether it is because their music is avant-gardeor out of synch with what is currently popularsuch artists toil in obscurity for most of their creative days. And suddenly, after their death, public recognition and financial rewards abound. Too late for the creator, but in time to nourish their heirsif the duration of protection is sufficient. What was lost to the creator should not be also lost to his or her heirs.
I can tell you from personal experience that it is impossible to predict when in a writer's life (or after it) a song will become a hit, if at all. Often a song can languish for decades before it gets recognition.
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Nearly 30 years ago I wrote ''What a Wonderful World'' for Louis Armstrong. For almost 20 years, the song was not a major or even recognizable hit in America. It never reached the charts of Hit Records; it did not enter the Hall of Hits licensed by my performing rights society; it was not used in any television show or motion picture. However; it was one of my most cherished copyrights because I so idolized Louis Armstrong. I only hoped that one day it would receive some public recognition.
Finally, ten years ago, the song suddenly achieved wide popularity in a major motion picture, ''Good Morning, Vietnam.'' As a juxtaposition to the devastation depicted by the movie's screenplay, ''What a Wonderful World'' was sung by Louis Armstrong, creating the counterpoint to the movie's theme. After 20 years, the song finally became a recognized hitin the recording world, as a major motion picture theme, and in my performing rights society.
If we are to encourage creativity, at a minimum we must offer to the thousands of my colleagues who struggle to earn a living in this difficult and competitive business the reasonable prospect that they can leave a legacy to their children and grandchildreneven if their compositions do not become commercially viable for many years. An additional 20 year term of protection will help guarantee that incentive.
There is yet another, related reason why a 20 year extension is important to creators. Technological developments over the last two decades have greatly increased the commercial life and value of copyrighted works, even those that are older. The CD and the VCR are obvious examples of new technologies that have and will increase creators' rewards. Moreover, expanded cable television, satellite services, and the ''information superhighway'' all will require programmingmusic and video. Creators and their heirs should benefit from these technological advances.
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Finally, let me just address one argument that has been advanced against term extensionthat by postponing the time when works enter the public domain, a longer term would frustrate the goals of wider availability and lower prices. Common sense would suggest just the oppositethat, in fact, works become less available and no less expensive once they enter the public domain. Why would a music publisher or anyone controlling a copyrighted work invest funds to exploitor restorea public domain work when there is little likelihood that they will be able to recoup their investment or turn a profit? The esteemed Harvard Law Professor Arthur Miller made this point cogently in a column in Billboard:
But, paradoxically, works of art become less available to the public when they enter the public domainat least in a form that does credit to the original. This is because few businesses will invest the money necessary to reproduce and distribute products that have lost their copyright protection and can therefore be reproduced by anyone. The only products that do tend to be made available after a copyright expires are ''down and dirty'' reproductions of such poor quality that they degrade the original copyrighted work. And there is very little evidence that the consumer really benefits economically from works falling into the public domain. ''Extending Copyright Preserves U.S. Culture,'' Billboard, January 14, 1995.
When a copyright enters the public domain, in the main there are no gainers; only losers. The marketplace, whether for books, records, movies, or any of the other performing arts, does not pass on to the public any savings supposedly achieved by using or adapting a public domain work. Theoretically, the use of a public domain song, book, drama or work of art should result in a lower price paid by the general public. But ask yourself: Is any book, movie or recording sold to the public at a reduced price because its subject matter has entered the public domain? In my experience, the answer is no. The price remains the same; only the creator losesthe payment for his or her labor.
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Copyright term extension is good for American creators, American consumers, and the American economy. In short, it represents good public policy. SGA urges its prompt enactment.
Without question, the most immediate threat to the ability of American songwriters to earn a living and provide for our families has been raised by the decision of the United States Court of Appeals for the Ninth Circuit in La Cienega Music Co. v. ZZ Top, 53 F.3d 950 (9th Cir. 1995), cert. denied, 116 S. Ct. 331 (1995), and the subsequent decision by a federal district court in Tennessee, Mayhew Music Co. v. Gusto Records, (N.D. Tenn., April 4, 1997), which relied on La Cienega and an unpublished Sixth Circuit opinion to similar effect.
In essence, these decisions held that the sale of recordings to the public constituted ''publication'' of the underlying musical composition embodied in the recording under the 1909 Copyright Act. This meant the recording had to comply with the rigid requirements of the 1909 Act, including that it bear a copyright notice in the proper form, if the musical composition was to receive Federal copyright protection. Because older recordings almost never contained a copyright notice in the form required under the 1909 Act, these decisions mean that hundreds of thousands of pre-1978 musical works may have inadvertently forfeited copyright protection and now have been thrust into the public domain.
What is especially disturbingand completely inexplicableto those of us who simply write music is that for years we have been following the law, the rulings of the Copyright Office, and the custom and practice of the music industry that distribution of a recording did not constitute ''publication'' under the 1909 Act. Now we are told that there is a cloud over virtually every musical composition written before 1978 and that music users may refuse to honor license terms and pay us our required royalties. Preliminary estimates suggest that this could cost American writers some $1.25 billion annually in lost royalty income.
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I want to be absolutely clear about this. Over 20 years ago, the law waswe thoughtsettled by the Court of Appeals for the Second Circuit in Rosette v. Rainbo Record Manufacturing Corp., 354 F. Supp. 1183 (S.D.N.Y.), aff'd per curiam, 546 F.2d 461 (2d Cir. 1976), which confirmed more than 80 years of established industry practice and written guidance from the Copyright Office that distribution of recordings released under the 1909 Act did not constitute publication. Now we are told that the law has suddenly changed, that the Copyright Office interpretation and prior practice were wrong, and that we have been retroactively deprived of copyright protection for our creations.
To say this situation is intolerable would be putting it mildly. For years we have operated in the good faith belief that our business practices were correct under the law and would not undermine our copyright protection. Suddenly we are confronted with a situation where our copyrighted works are being stolenwith the permission of the courtsand we have absolutely no way to correct what has now been deemed to be wrong.
The Register of Copyrights recognized the urgency of the situation when she wrote Chairman Coble in November 1995 noting that she was ''extremely concerned'' about the consequences of the La Cienega decision and offering her strong support for corrective legislation. This Subcommittee, the full Judiciary Committee and the House of Representatives agreed and last year unanimously passed language that would have overturned the decision. Unfortunately, the proposal died in the Senate at the end of the last Congress for reasons unrelated to the merits.
This year, Members of Congress have once again introduced legislation that would remove the cloud over our copyrights. Chairman Coble last week introduced H.R. 1967, directed solely at this problem. Both H.R. 1621, Rep. Bono's term extension bill, and S. 505, Judiciary Committee Chairman Hatch's companion bill in the Senate, also contain language that would overturn the result of La Cienega. We are extremely grateful for these efforts. In a letter to Congress earlier this month, the Register of Copyrights has again communicated her concern about the draconian result of La Cienega and indicated her support for these legislative efforts. So far as I am aware, there is no substantive opposition to the idea of correcting this injustice.
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We implore you to move immediately to pass legislation to remedy this outrageous situation. It is no exaggeration to say that the entire life's work of thousands of songwriters as well as the value of whole music catalogues is at risk. Any delay exposes our industryone of the crown jewels of American cultureto irreparable harm, while thieves and bootleggers get rich from our creative efforts.
Let me be as clear as a Cole Porter lyricH.R. 789, the House music licensing bill, is one of the most serious threats ever faced by American songwriters. It would roll back the copyright protection for creators of music that has been part of American law for decades. In so doing, it would dismantle the incentives that have made it possible for SGA members to create and to produce music that has swept the globe, music, as I noted earlier, that has contributed substantially in recent years to the positive side of an otherwise bleak American trade balance equation.
I have explained that I make my living as a songwriter. Like many of my colleagues in the industry, songwriting is virtually my only source of income, and the money I earn from the use of my songs supports me and my family. We songwriters rely entirely on the performing rights societies (ASCAP, BMI, and SESAC) for royalty income when our work is publicly performed. Although songwriters have the ability to create music, we do not have the ability to track its use by others and to ensure that we receive fair compensation. That is the job of the societies, which license our creations and make certain we have an income on which to live.
Page 91 PREV PAGE TOP OF DOC Users of our music also benefit from the societies. For without such performing rights organizations, users would be forced to search for every copyright owner whose music was being publicly performed in order to get permission for such performances. Since there are over a billion public performances each year from tens of thousands of different sources, this would be an impossible task.
Like every other American who provides a service or creates a product, composers and lyricists should be compensated for the use of our work. Intellectual property is, after all, property. While writing songs may strike some people as an easy way to earn a living, I can assure you that it is not. It is extremely hard work, and tremendously competitive, and it is most often only after many years of rejection that a writerif he or she is luckybegins to make a living in the profession. Many writers, even with talent, are never able to do so. I would venture to say that less than ten percent of songwriters are able to earn a living solely from creating music. As an economic analysis prepared for SGA by Pierre Rinfret in 1980 concluded: ''Songwriting is an occupation which has a high degree of risk, a high degree of failure, a low chance of success and, in general, miserly rewards.''
Some people, however, seemingly do not believe my creations and those of my colleagues deserve the same treatment as a painting, a pair of shoes, or for that matter a wonderful meal or an exotic cocktail. They cannot accept the idea that the performing rights societies should be allowed to act on behalf of songwriters to collect reasonable license fees for the use of our work from restaurants, bars, and other businessesincluding some profit-making radio stationsthat use our creations for their commercial gain.
Let me be blunt: these are my songs. I wrote them; they are my property. While I obviously want as many people as possible to enjoy my musical creations, if they are used I deserve to be paid, even a nominal fee like that negotiated on my behalf by ASCAP, the society of which I am a member.
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H.R. 789 and similar legislation pending in the Senate would deprive music copyright owners of compensation for uses of our music that benefit the owners of businesses in which radio and television performances are presented. But when the owner of a restaurant, sports bar or retail establishment decides to present radio or television performances, he or she does so because of a belief that these performances will improve the business by enhancing the atmosphere. My music, if played on a radio-over-loudspeaker system in a restaurant or store, entertains customers and pleases employees, stimulating productivity. That is why businesses play our songsto improve the environment and their bottom line.
If businesses are making money off the talent of songwriters, we should be compensated. If businesses truly believe our creations have no effect on their bottom line, they can eliminate the entertainmentand the need to pay us. And let's be clearwhat an individual establishment pays us is not going to break the bank. The average cost to a restaurant that uses our music is only in the neighborhood of $3.00 a day; yet cumulatively if H.R. 789 is enacted we songwriters could lose a substantial portion of our income.
Despite repeated public statements by Members of Congress on both sides of the aisle about the desirability of less intrusion by the federal government into the marketplace, H.R. 789 would have the government impose a solution on a commercial dispute between the performing rights societies and some retail establishments and between the societies and profit-making radio stations. But if there are honest disagreements about the procedures the societies employ to protect their songwriter members, those practices should be fairly negotiated and settled at the bargaining table. In fact, under an agreement to protect small businesses reached between the National Licensed Beverage Association (NLBA) and the societies, some 70% of all retail businesses would be exempt from license fees for radio and television music. But to suggest that the underlying copyright law be gutted so that creators are no longer compensated at all for their work is manifestly unfair to thousands of hard-working songwriters who strive every day to make life more enjoyable by writing the best music in the world.
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Songwriters are not alone in their opposition to H.R. 789. The Register of Copyrights, the Commissioner of Patents and Trademarks, the Office of the United States Trade Representative, the American Intellectual Property Law Association, the Coalition for the Protection of America's Gospel Music Heritage, the Church Music Publishers Association, the Christian Music Trade Association, and the National Federation of Music Clubs, among others, have all condemned this music licensing legislation as terribly misguided public policy. Their concerns mirror our own. As Justice Oliver Wendell Holmes wrote in Herbert v. Shanley in 1917, ''If music did not pay, it would be given up.'' If we are not paid, we will not be able to practice our craft for a living, and a unique American industry will suffer grievous harm.
Songwriting is a tough, unpredictable business. Although the media touts the huge incomes of popular entertainers, the vast majority of those few who do make millions are singer/songwriters, and they make most of their money from performingnot writing. Those who only write songs derive most of their income from the royalties they collect through ASCAP, BMI and SESAC. Thus, the attacks on the societies by the National Restaurant Association and some religious broadcasters are nothing more than attacks on creators.
It comes down to this: I am a working guy with a wife and four children. If I couldn't make a living by writing songs, I'd have to do something else. H.R. 789 and its ilk would make it all but impossible for my colleagues to survive doing what they do best. That would be a tragedy for songwriters.
But it would be a bigger tragedy for American culture.
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GEORGE DAVID WEISS, COMPOSER/LYRICIST
Most record collections today include songs written by George David Weiss. His songs have reached music fans around the worldin all categoriespop, rock, soul, jazz, country, film and Broadway.
Born and raised in New York, George David Weiss originally set out to become an accountant or lawyer. However, his love for music eventually led to a change in career goals and he enrolled in Julliard School of Music, one of the most prestigious music schools in the world. After three years of sharpening his writing and arranging skills, he began his professional music career arranging for such artists as Stan Kenton, Vincent Lopez, and Johnny Richards, among others.
George David quickly became one of the most in-demand songwriters. His songs have been recorded by Louis Armstrong, Frank Sinatra, Bette Milder, Elvis Presley, Charlie Rich and the Stylistics, to name a few. His classic Presley tune ''Can't Help Falling in Love,'' which was featured on the soundtrack to Blue Hawaii, went on to become Presley's closing theme song. Other classic songs written by George David are ''The Lion Sleeps Tonight,'' a timeless hit recently featured in five movies including The Lion King and Ace Ventura, Pet Detective; ''What a Wonderful World''; and ''Lullaby of Birdland.'' Other movies that include George David Weiss' songs are: Good Morning Vietnam!, Wild In The Country, Godfather II, Mediterranean Holiday, The Rose, and Honeymoon in Vegas.
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In 1982, George David Weiss became President of the Songwriters Guild of America, the largest and oldest of all the songwriters' organizations in the country. He has spent the last fifteen years working to gain recognition for songwriters and fighting for legislation that is crucial to their economic well-being. He has been a frequent witness before United States Senate and House Committees looking into problems facing songwriters and the music industry today. In the early 1990s, George David was at the forefront of a two-year battle to have digital audio recording technology legislation enacted in a way that protected songwriters. George David has also appeared before state legislative committees and the U.S. Copyright Office on behalf of songwriters.
In 1984, We Write The Songs, a show conceived and produced by George David and spotlighting personal appearances by more than sixty creators and performers, was presented by The Songwriters Guild of America at the Palace Theatre in New York City. The show was designed to raise awareness of the unfair treatment of songwriters. In that same year, George David was inducted into The Songwriters National Hall of Fame by the National Academy of Popular Music.
The 1990's have already witnessed the broad inclusion of George David Weiss' music. Proving over and over that great music never dies, in 1990, for her Unforgettable album, Natalie Cole recorded ''That Sunday That Summer,'' a hit that George David originally wrote for her famous father, Nat King Cole. In 1992, U2's lead singer, Bono,
recorded ''Can't Help Falling in Love'' for the hit soundtrack for the movie Honeymoon In Vegasand the soundtrack went pure gold. And in 1993, the band UB40 had a worldwide number one smash with ''Can't Help Falling in Love.''
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Recently, George David has been busy producing compilations of his own music. In 1994, he released a CD entitled ''Jambo! Africa,'' a collection of inspired new songs along with a couple of wonderfully rearranged classics (''The Lion Sleeps Tonight'' and ''What a Wonderful World''). ''Jambo! Africa'' was also released on a cassette single on the flip side of ''Lion Sleeps Tonight.'' What makes this CD stand out is the powerful and sensitive way the vocals are executed. Together with the authentic fresh rhythms and sounds of Africa, they deliver vibrant interpretations of George David's compositions, and the featured and gifted singer is none other than Bobby Lyle Weiss (recording under the name ''Bobby''), George David's son, a rising young star, proving that great talent for music in this case is a family affair!
Lullaby of Birdland (Ella Fitzgerald, Sarah Vaughan, Mel Torme, etc.); Can't Help Falling In Love (Elvis Presley, Bono, UB40, etc.); What A Wonderful World (Louis Armstrong); The Lion Sleeps Tonight (The Tokens); That Sunday That Summer (Nat King Cole); Stay With Me (Bette Midler); Snoopy's Christmas (The Royal Guardsman); Let's Put It All Together (The Stylistics); Mr. WonderfuL (Peggy Lee); Too Close For Comfort (Frank Sinatra, Sammy Davis, Jr., etc.); Walkin' Miracle (Essex); I'll Never Be Free (Kay StarrTennessee Ernie Ford); Carnival (Perry Como); Wheel Of Fortune (Kay Starr); I Don't See Me In Your Eyes Anymore (Charlie Rich, Perry Como); Cross Over The Bridge (Patti Page); Oh What It Seemed To Be (Frank Sinatra); Rumors Are Flying (Frankie Carle); Can Anyone Explain, No, No, No (The Ames Bros.); Confess (Patti Page); How Important Can It Be (Joni James); Why Can't I Walk Away (Vic Damone); These Things I Offer You (Patti Page); and To Think You've Chosen Me (Eddy Howard).
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The Lion King (''The Lion Sleeps Tonight''); 29th Street (''The Lion Sleeps Tonight''); Brain Donors (''The Lion Sleeps Tonight''); Troop Beverly Hills (''The Lion Sleeps Tonight''); Options (''The Lion Sleeps Tonight''); Matinee (''The Lion Sleeps Tonight''); Good Morning, Vietnam! (''What a Wonderful WorldLouis Armstrong); Honeymoon In Vegas (''Can't Help Falling In Love''); Blue Hawaii2 Songs(Elvis Presley); Wild In The CountryTitle Song(Elvis Presley); Toys In The AtticTitle Song(Dean Martin); Godfather II(''Mr. Wonderful''); The Rose (''Stay With Me'' Bette Midler); Juggernaut (''Oh What It Seemed To Be'' Frank Sinatra); Murder, Inc.All Songs(Peter Falk); Fun And Fancy FreeTitle Song(Walt Disney); Melody TimeTitle Song(Walt Disney); Gidget Goes To RomeAll Songs; Mediterranean HolidayAll Songs(Burl Ives); MademoiselleAll Songs; Hairspray (''I Wish I Were A Princess'' Peggy March); and Ace Ventura, Pet Detective (''The Lion Sleeps Tonight'').
Mr. WonderfulFull Score(Sammy Davis Jr.); Maggie FlynnFull Score(Shirley Jones, Jack Cassidy); First ImpressionsFull Score(Hermione Gingold, Polly Bergen); Send Me No FlowersTitle Song(David Wayne); Smile, Smile, SmileFull Score(Off Broadway); THE JOKERSFull Score(Off Broadway).
Page 98 PREV PAGE TOP OF DOC NBC's ''Who, What, Where'' TV Game ShowAll Music; and ''Freedomland'' Park and the Col. Records Album (With Jule Styne)All Lyrics.
AWARDS AND RECOGNITION
Inducted into the Songwriters National Hall of Fame, by the National Academy of Popular Music, 1984; Chamber of Commerce, New York City, Award for Outstanding Contribution, 1988; Honorary Doctorate of Music, Five Towns College, Seaford, NY, 1991; ''Can't Help Falling In Love'' awarded one of ''Ten Most Performed Songs of Movie Music of the Last Decade,'' 1991; ''Can't Help Falling In Love'' Awarded One of the ''Most Played Songs of the ASCAP Catalog of the Last Decade,'' 1992; and Citation for Inspiring Musical Compilation '' Jambo! Africa,'' Presented by the Ambassador to Kenya and Representative of Tanzania, UN, 1994.
Hon. HOWARD COBLE, Chairman
|The Songwriters Guild of America,|
|Weehawken, NJ, May 15, 1997.|
Subcommittee on Courts and Intellectual Property,
House Committee on the Judiciary
Page 99 PREV PAGE TOP OF DOC DEAR CHAIRMAN COBLE: As members of The Songwriters Guild of America, the nation's oldest and largest organization run exclusively by and for songwriters, we are writing to you about two issues of immense consequence to those of us and our colleagues who have made American music the most popular in the world.
First, we urge you to lend your support to H. R. 604, legislation that would extend the term of copyrights in the United States by 20 years. Without passage of this legislation, not only will American songwriters lose millions of dollars in income, but our country's balance of trade will suffer and our international trade policy will be seriously undermined.
On July 1, 1995, the European Union harmonized the copyright term in all its member countries at a minimum of life-plus 70 years, 20 years longer than the term in the United States. By directive, EU countries will not provide copyright protection for our music played in Europe beyond what our own country provides. This means that if H.R. 604 is not enacted, American songwriters will have 20 years less protection in Europe than our European counterparts and we will not be paid for the use of our music there during those years.
It is no exaggeration to say that the whole world loves American music. The fact is that American intellectual property is the most sought after abroad and is one of the few bright spots in our balance of trade. According to a report issued in March by the International Intellectual Property Alliance, the core copyright industriesincluding American musictotaled over $53 billion in foreign sales in 1995.
If Congress does not pass H.R. 604, we will abandon 20 years worth of valuable overseas copyright protectionand substantial foreign salesat a time when we face severe trade deficits in many other areas. This makes no sense, especially when the increased protection abroad will cost taxpayers and consumers at home absolutely nothing.
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We would add a personal note. Like everyone, we songwriters are now living longer and increasingly are often blessed with children later in life. Congress has previously extended the copyright term to protect not only creators, but our children and grandchildrenthat is, three generations. Without passage of H.R. 604, our copyrights will all too often expire before even one generation of our families has benefitted. That is manifestly unfair. If we are to encourage creativity, at a minimum the thousands of songwriters who struggle every day to earn a living must have a reasonable prospect of a legacy for our children and grandchildren.
Second, we implore you vigorously to oppose H.R. 789, music licensing legislation that would steal our creations and take away our income when our compositions are played in bars, restaurants and other retail businesses.
By giving a free ride to commercial establishments that use our music to enhance their atmosphere and their bottom line, H.R. 789 would roll back the critical copyright protections that have been part of American law for decades and would dismantle the incentive to create. For while the average cost to a restaurant that uses our music is only in the neighborhood of $3.00 a day, if H.R. 789 is enacted songwriters could lose a substantial portion of our income, decimating our ability to earn a living.
Like every other American, songwriters deserve to be compensated for the use of our work. As small businesspeople we are engaged in an extremely difficult and competitive occupation. It is most often only after many years of struggle that a writerif he or she is fortunatebegins to made a living in the profession. Some people, however, apparently do not believe that our creations deserve the same treatment as a painting, a piece of furniture, or for that matter a wonderful meal or an exotic cocktail. They do not understand that our songs are intellectual property and that we should be paid for their useparticularly when businesses are making money off our work.
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Despite repeated public statements by Members of Congress on both sides of the aisle about the desirability of less intrusion by the federal government into the marketplace, H.R. 789 would have the government impose a solution to a commercial dispute between our performing rights societies (ASCAP, BMI, and SESAC) and some retail establishments rather than encouraging the parties to settle their differences at the bargaining table. It would result in taking our property by legislative fiat. This is particularly unnecessary and unfair given that the societies have already agreed to a compromise that would exempt more than 70% of those businesses from license fees for use of our music.
Finally, gutting the copyright law to deprive songwriters of our livelihood is not only unfair but would also violate our country's obligations under international treaties and invite retaliatory actions from abroadat precisely the time when we are seeking better protections for our products in foreign markets.
As you look to us and our colleagues to make your life and the lives of your loved ones more enjoyable through our music, we are looking to you to protect our ability to earn a living in our chosen profession. Please support H.R. 604 and oppose H.R. 789 so that songwriters can continue to do so.
George David Weiss, ''What A Wonderful World;'' Mike Stoller, ''Kansas City;'' Lalo Schifrin, ''Mission Impossible;'' Lee Adams, ''Bye Bye Birdie;'' Sheldon Harnick, ''Fiddler on the Roof;'' Fred Ebb, ''New York, New York;'' Jerry Leiber, ''Is That All There Is;'' Ervin Drake, ''(When I Was Seventeen) It Was A Very Good Year;'' Charles Strouse, ''Annie;'' Vic Mizzy, ''The Addams Family;'' Irvine Burgie, ''Day O;'' Ellie Greenwich, ''Be My Baby;'' Charles F. Carnes, ''I Can't Even Get The Blues;'' Ray Evans, ''Silver Bells;'' Jay Livingston ''Mona Lisa;'' Don Robertson ''Please Help Me I'm Falling;'' Joe Sherman, ''Ramblin Rose;'' Rudy Clark, ''Shoop-Shoop Song (It's In His Kiss);'' Jim Daddaro, ''Love Remains;'' Earl Rose, ''Every Beat Of My Heart;'' Donald Kahn ''A Beutiful Friendship;'' Raquela Rios, ''Por Un Minuto;'' Benny Carter, ''Cow Cow Boogie;'' Al Kasha, ''The Morning After;'' Cling Ballard, Jr., ''The Heart Of A Fool;'' Charles ''Chick'' Rains ''Old Enough To Know Better;'' Casey Kelly, ''The Cowboy Rides Away;'' and Bobby Troup, ''Route 66.''
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Mr. COBLE. Thank you, sir.
For the benefit of the audience, folks, I am not blowing the whistle at 5 minutes. I am letting it run well beyond 5 minutes. So give me some credit; don't insert pins into your Coble doll tonight.
STATEMENT OF FRITZ ATTAWAY, SENIOR VICE PRESIDENT, GOVERNMENT RELATIONS, AND WASHINGTON GENERAL COUNSEL, MOTION PICTURE ASSOCIATION OF AMERICA
Mr. ATTAWAY. Chairman Coble, members of the panel, thank you for giving me the opportunity to appear here today. Mr. Chairman, I will abide by your 5-minute rule. As a matter of fact, I will try to follow the lead of my wife several years ago.
We were about to get on a small commercial aircraft where they had to do a weight and balance. She got up to the counter as they were asking everyone's weight; she said, ''I weigh 160 pounds.'' The agent looked down and said, ''you could not possibly weigh 160 pounds'' and she said, ''yes, but I am making up for a lady who told you a lie.''
So without any disrespect to my fellow panelists, I will try to be very brief.
Page 103 PREV PAGE TOP OF DOC Ms. Preston and Mr. Weiss have already listed the primary arguments in favor of extending the copyright term. I hope you will find them persuasive. What I would like to do very briefly is to summarize testimony that has previously been given to this panel by Jack Valenti, the president of our association, and also perhaps dispel some misconceptions about the effect copyright extension will have on copyright owners and users.
As was already pointed out by Governor Sundquist, America is the world's leading producer and exporter of copyrighted material. The core copyright industriesmovies, music, printed material and computer softwareaccount for some 3.7 percent of our gross domestic product, provide over 3 million jobs and earn some $54 billion in export revenue. Moreover, the U.S. copyright industries are growing considerably faster than the economy as a whole, providing new jobs at almost three times the rate of the rest of the economy.
It is unquestionably in America's economic interest to maintain and nurture its copyright industries and to ensure their competitiveness in global markets. To do this, the United States must keep up with international standards of copyright protection and set an example for the rest of the world to emulate.
The emerging world standard for the term of copyright protection is life of the author plus 70 years. This is the term of protection that has been mandated by the European Community and implemented across Europe and elsewhere. As the world leader in producing copyrighted works, it would be unseemlyit would be just plain unthinkablefor the United States to lag behind other nations in protecting its copyright industries.
There is another very important reason for the United States to bring its copyright term up to the EU level. As you have already heard, under the rule of the shorter term, unless the United States extends its term of copyright protection, U.S. works in Europe will not be protected during the extended period enjoyed by European works. Revenues that could have been earned by U.S. copyright owners during the extended period will not be earned, and foreign earnings will be reduced.
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Now, to dispel some misconceptions: First and foremost, term extension will not provide a huge windfall to anyone and certainly not to the motion picture industry. We do not project a significant revenue increase for movies during the proposed extended term until the year 2020. For us in the movie industry, the importance of U.S. leadership in copyright protection within the community of nations is far more important than short-term revenue impact.
Second, term extension will not adversely affect the users of copyrighted material. In most cases, the very opposite will be true. This is because copyright holders are given the incentive not only to create works, but they also are given an incentive to continue to distribute them and keep them in circulation.
Finallyand this is a word for which I am sure Professor Reichman has been waiting for too longa comment about how creative contributors to films, the writers, the actors and the directors, will be affected by term extension. Mr. Epstein has expressed concern that term extension will provide a windfall to the major film studios which own the copyrights to films, but not to the creative contributors. First of all, as I have already said, term extension will not provide a windfall to anyone. Second, writers and other creative talent will not be left out by extending copyright term. The studios already have agreed to negotiate with the respective guilds how any additional revenues will be shared. This will be done in the context of collective bargaining, which is a process that has helped make the U.S. film industry the most vibrant and successful in the world.
In other words, Mr. Chairman, there is no problem here. Any revenues derived from extension of term will be shared fairly according to the collective bargaining that has worked quite well for the industryI think, all elements of the industry.
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That is my statement, Mr. Chairman. Thank you very much. I look forward to answering any of your questions.
[The prepared statement of Mr. Attaway follows:]
PREPARED STATEMENT OF FRITZ ATTAWAY, SENIOR VICE PRESIDENT, GOVERNMENT RELATIONS, AND WASHINGTON GENERAL COUNSEL, MOTION PICTURE ASSOCIATION OF AMERICA
Chairman Coble, members of the Subcommittee, thank you for giving me this opportunity to appear before you to testify in support of extending the term of copyright protection in the US by 20 years.
Mr. Chairman, you did not travel all the way to Nashville, Tennessee to hear from a Washington person, so I will be very brief. I look forward to engaging in a constructive exchange with the Subcommittee and members of this panel later.
Today I would like to summarize the testimony previously given by Jack Valenti before this Subcommittee, and perhaps dispel some misconceptions about the effect term extension will have on copyright owners and users.
America is the world's leading producer and exporter of copyrighted material. The core copyright industriesmovies, music, printed material and computer softwareaccount for some 3.7% of our GDP, provide over 3 million jobs, and earn some $54B in export revenue. Moreover, the US copyright industries are growing considerably faster than the economy as a whole, providing new jobs almost 3 times faster than the rest of the economy.
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It is unquestionably in America's economic interest to maintain and nurture its copyright industries, and to assure their competitiveness in global markets. To do this, the US must keep up with international standards of copyright protection and set an example for the rest of the world to emulate.
The emerging world standard for term of copyright protection is life of the author plus 70 years. This is the term of protection that has been mandated by the European Community and implemented across Europe and elsewhere. As the world leader in producing copyrighted works, it would be unseemly, and just plain unthinkable, for the US to lag behind other nations in protecting its copyright industry.
There is another, very important reason for the US to bring its copyright term up to the EU level. International law does not require the EU to protect foreign works longer than they are protected in their home country. Thus, until the US extends its copyright term, US works will not be protected during the extended period enjoyed by European works. Revenues that could have been earned by US copyright owners during the extended term will not be earned, foreign earnings will be reduced, the American economy and its creative community will be the losers.
Now to dispel some misconceptions.
First and foremost, term extension will not provide a huge windfall for anyonecertainly not for the motion picture industry. We do not project a significant revenue increase for movies during the proposed extended term until the year 2020. For us in the movie industry, the importance of US leadership in copyright protection within the community of nations is far more important than short term revenue impact.
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Second, term extension will not adversely affect the users of copyrighted material. In most cases, the very opposite will be true. This is because copyrights give owners not only the incentive to create works, they provide continuing incentive to distribute them.
Absent copyright, movies, books, songs, etc. have no value. They are free for the taking. Thus, there is no incentive to maintain their qualityparticularly important for filmsor to aggressively market them. What is the sense of promoting the availability of a work if anyone else can capitalize on your promotional efforts?
Finallya word I am sure you are relieved to heara word about how the creative contributors to filmswriters, actors and directorswill be affected by term extension. Concern has been expressed that term extension will provide a windfall to the major film studios which own the copyrights to films, but not to the creative contributors.
First of all, as I have said, term extension will not provide a windfall to anyone. Second, although the studios have already agreed to negotiate with the respective guilds how any additional revenues will be shared. This will be done in the context of collective bargaining, which is a process that has helped to make the US film industry the most vibrant and successful in the world, and has enriched every element of our film communitywriters, producers, actors, directors and others.
Mr. Chairman, members of the Subcommittee, thank you for your attention.
Mr. COBLE. Thank you, Mr. Attaway.
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Mr. Reichman, Professor, the gentleman who sits behind me studied law at the Vanderbilt School of Law, and he just whispered to me that he still feels a burst of anxiety and uncertainty being in the same room with a law professor.
Mr. SENSENBRENNER. Will the gentleman yield?
Mr. COBLE. I will indeed.
Mr. SENSENBRENNER. Did he tell you what grade he got from Professor Reichman?
Mr. COBLE. He did not reveal that to me. And we won't put him on the spot.
Good to have you with us, Professor.
STATEMENT OF JEROME REICHMAN, PROFESSOR, VANDERBILT SCHOOL OF LAW
Mr. REICHMAN. Thank you for inviting me, Chairman Coble, and thanks to the other members of your committee. I remind you that you invited me to speak to this subcommittee in 1995 and that my findings from that report were published in the article that you mentioned, earlier; i.e., in the 1996 Cardozo Arts and Entertainment Law, and I beg your permission to include that article as my written statement.
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Mr. COBLE. Without objection, it will be received in the record.
Mr. REICHMAN. Today I will summarize some of the main findings in that article. You asked me in particular to address what the requirements of international law were with regard to the issue of copyright duration and whether U.S. law complied with those requirements.
The primary finding of my study is that U.S. copyright law now substantially complies with the international minimum standards pertaining to duration of copyright and related rights as they stood prior to the pending WIPO treaties adopted in December 1996. I will not discuss the WIPO treaties here today. They do raise one or two questions that we should look into in another forum.
The TRIPS Agreement, i.e., the Agreement on Trade-Related Aspects of Intellectual Property Rights, which fits within the World Trade Organization (WTO) framework, is the leading international treaty now, and it incorporates the relevant provisions of the Bern Convention, b, reference.
Under the TRIPS Agreement, the basic term for individual authors remains life plus 50 years after any given author's death. For corporate authors, or so-called ''works made for hire,'' ''the TRIPS Agreement clearly favors a minimum term of 50 years for most corporate productions (except broadcasts), whether they are governed by copyright or neighboring rights laws. The United States already exceeds this standard because its laws give 75 years of protection to all works made for hire, including computer programs, original compilations, and sound recordings. The United States also protects live performances against bootleg recordings, as required by article 14(l) of the TRIPS Agreement; and Congress has restored foreign rights that lapsed prematurely owing to technical forfeitures. In short, there is nothing in either the TRIPS Agreement or the Berne Convention that requires Congress to extend the terms of copyright protection.
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If we look at the European Union after the Council Director of 1993, which harmonized the terms of protection there, my study advises extreme caution when discussing harmonization or when making comparative judgments. Our laws and their laws are still very different, particularly with regard to works make for hire. Some works that are protected here in copyright law, such as sound recordings, are only protected in neighboring rights laws over there. They will receive only 50 years of protection in most EU countries. Other works that are protected here as works made for hirethe work-made-for-hire doctrine is often not recognized in Europemay qualify, in principle, for longer protection over there. So we have to be very careful.
We can say that, after the incorporation of computer programs into copyright law, there is a greater tendency in the European Union to recognize works made for hire, and I think that will grow in the information age. Against this background, what we can say is that if the United States extends its protection of works authored by natural persons from a term of live plus 50 years to a term of life plus 75 years, that will to some extent harmonize EU and U.S. law insofar as they both apply to natural persons. But it will deharmonize relations with the rest of the world, which may continue to adhere to the life plus 50 standard in the TRIPS Agreement.
By the same token, if we extend the term of protection of works made for hire from 75 to 95 years, that will deharmonize U.S. relations with everyone else. A few works for hire in the European Union may now get 70 years, although that is not entirely clear yet. Most will get 50 years, computer programs, and the rest of the world will continue under the TRIPS Agreement to give most works by corporate author only 50 years of protection.
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Given these disparities, my study urges Congress to adopt a U.S. version of the rule of the shorter term. We really do not want foreign rights holders, it seems to me, to obtain longer protection in the United States than they would obtain in their countries of origin.
Turning from what international law requires us to do, one was ask whether there are not good and sufficient reasons to extend the copyright term as a matter of domestic policy. Is it good for the United States? My study concludes that with respect to true artists and authors who create traditional literary and artistic works, the answer is definitely yes, but on condition that the extended 20-year term should actually benefit living authors or their heirs and not their publishers.
Why is this a sensible policy? It is, as Mr. Weiss said, a policy goal of copyright law that authors should be protected in their own lifetimes and for the lifetimes of their immediate heirs. As you heard today, authors live longer than before. While that automatically gives some of them longer protection, others have children later in life, and those children seem to live longer, too. We see this often in Nashville, where families literally depend on the royalties from country music, and the music continues to be exploited long after the composer is or the lyricist's death. We don't want to see commercial enterprises exploiting these creations, making money on them without the authors, direct heirs benefit us from this continued success. That does raise concerns of fairness and equity that are properly viewed as a matter of cultural policy.
I would add that both my study and also that of Prof. Bill Patry, now at Cardozo Law School, who used to be your subcommittee counsel, call your attention to the possible desirability of revising the termination rights in sections 203 and 304(c) of the Copyright Act of 1976 to better ensure that all authors benefit from an extended term of protection.
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In this regard, I am not proposing anything radical that would destabilize contracts with derivative work owners. But I do think we ought to have a renegotiation of the rates between the underlying work's owner and the derivative work owner at least once, comparable to what Congress did with respect to derivative works when it restored the copyrights of foreign rightsholders who had suffered technical forfeiture.
By contrast, my study concludes that Congress should not extend the term for works-made-for-hire because it could have serious anticompetitive effects in both the domestic and global markets. In general, and especially with regard to electronic information tools, we must remain competitive with foreign producers, including the newly industrialized countries of East Asia, which will normally adhere to the TRIPS standard for 50 years for works-made-for-hire. If we overprotect our innovation, foreign producers operating under more competitive conditions in their home markets may gradually improve their position in third markets. I am also afraid that contrary to what you have heard, our long-term trade balance will suffer because we will have to pay overly long royalties in tribute for innovative software and other information products developed abroad, we will need to use and borrow in order to remain competitive later on.
I will conclude here. In summary, I am skeptical of extending the term of copyright protection for works-made-for-hire, butfor all the reasons that you have heardI think it would be appropriate to extend the duration of copyrights for true authors and artists.
I thank you for your attention and I leave my written work with you, and I am happy to answer further questions. Thank you.
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Mr. COBLE. Thank you, Professor.
And I thank the panel for your appearance.
[Additional information follows:]
INSERT OFFSET RING FOLIOS 1 TO 31 HERE
Mr. COBLE. Mr. Attaway and panel, I am generally in favor of copyright term extension. Let me put a two-part question to you, Mr. Attaway, the first part being as a semi-devil's advocate, given the fact that I favor it.
Let us assume that this extension is enacted and approved, and then some guy comes along and says, maybe we need to extend it again. How long or how many times could the term be extended without running afoul of the constitutional structure allowing a grant for a limited time? Part A.
Part B, there is a legion of people, at least, perhaps more, who would encourage some sort of compromise on the issue of giving a portion of the revenues that would be realized from the term extension to the original writers, directors, producers, performers.
This is a hypothetical, Mr. Attaway: What sort of indication do you have right now from the group you represent about getting with the people I just mentioned to strike some sort of compromise? Would you be amenable to that? Or you may not be able to answer that right now.
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Mr. ATTAWAY. Absolutely. I not only can answer it, I can tell you that we have already indicated to the guild that the organization that negotiates in collective bargaining for the motion picture studios is not only willing, but anxious to sit down with the guilds to negotiate a fair sharing arrangement for any revenues that are received during the extended term.
Mr. COBLE. What say you to part A? Do you think we are running into constitutional shoals and reefs?
Mr. ATTAWAY. I do not.
You are correct that the Constitution refers to a limited term, but it alsothese are not the exact words, I think, but refers to promoting the useful arts and sciences.
I think it is a balancing act. We have extended term, I think the last time was in the 1976 revision which went into effect in 1978. It could be that in 2020, circumstances would suggest that an additional term be provided. I think it is a balance, and I think the world is coming to the conclusion that the correct balance today is life plus 70, and that is what I urge you to enact.
Mr. COBLE. Thank you, sir.
Mr. Weiss, let's assume some guy comes in here who is adamantly opposed to the extension. In your written testimony, you argued convincingly that without term extension, songwriters would have little or no incentive to create and compose songs. And let's assume this adversary of yours says to you, Mr. Weiss, you yourself are a songwriter, are you suggesting that you wouldn't have written those songs without a life plus 70 copyright term?
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Mr. WEISS. No, I am not suggesting that, but I think you have to go way back before the day I wrote ''The Lion Sleeps Tonight'' or whatever song you may be referring to. I think you have to go back to the beginning of when a young person is considering what he or she want to do in life, what are his or her talents? Does he or she want to be a writer, creator? Does he or she want to be a waiter or a lawyer?
One of the things that a young person inevitably will consider is, will I be able to earn a living at whatever choice I make? Not only for me, but for my spouse, my children and my grandchildren. If a young person sees that the copyright laws of our country are not protecting him and his children and grandchildren, he may very well decide on a different profession and therefore reduce the number of writers who you see out here today who want to do what they can with their talent and try to earn a little bit of a living.
Mr. COBLE. Thank you, sir.
Mr. Epstein, I am applying 2020 hindsight now. Back in your day, I want you to portray for me the climate in the motion picture community. Were the unions actively involved? Were you all represented by agents? I guess what I am grasping for is, why did you and your peers feel safe and secure in signing contracts that may subsequently have proven detrimental?
Mr. EPSTEIN. Forgive me. Due to the fact I have received no residuals since 1960, I can't afford a decent hearing aid.
Page 116 PREV PAGE TOP OF DOC Mr. DELAHUNT. I think that says it all.
Mr. WALTON. Would you accept an answer from me?
Mr. COBLE. I will, Mr. Walton.
That is a pretty good answer, Mr. Epstein.
Mr. WALTON. I told him to say that. That's a joke.
No, actually I am very grateful to be here. Let me answer your question, sir, this way.
Mr. COBLE. Mr. Walton, I realize I am examining from 2020 hindsight. It is easy for me to do that.
Mr. WALTON. Yes, it is. Let me help you in that regard and say that prior to 1960, writers, directors and actorsand I am here speaking on behalf of the three Guilds that represent those creative bodies todaydid not receive any kind of payment for the afteruse of their work unless it were by an individual contract; and it was, then, only a very few stars and directors and occasionally a writer.
When Mr. Epstein and his brother went to Hollywood in the 1930's and began writing, there was no effective representation by a guild or a union. The Writers Guild, for example, sir, was formed in 1933, fought tooth and nail by the studios who used this expression I heard today, ''there is no problem.'' They were not recognized as a guild or a union until 1938.
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They did not get their first contract until 1942, right after Pearl Harbor. It was five pages long and there were minimal protections. It was virtually impossible at that point in time for Mr. Epstein or his brother or any of the other creators and actors to negotiate any residual provisions.
By the way, nobody then could have the 2020 hindsight or the 2020 foresight to see the many uses to which it could be put. I hope that is helpful to you.
Mr. COBLE. It is very helpful. My time has expired. I may need to ask a couple more questions of this second panel.
Let me recognize the gentleman from Wisconsin.
Mr. SENSENBRENNER. Thank you very much. Mr. Chairman, I have sat through a number of these hearings over the years on term extensions. There seems to be somewhat of a divergence of testimony that we have heard, including today.
Organizations that own copyrights are all for extending the term. People who have created copyrightable works and have sold those copyrights tell us, hey, why extend the term for our creativity and make our creativity more valuable and not have us compensated for it?
So I would like to ask as many of the panel members who would like to venture an opinion on this subject, what would be your opinion on this legislation if it passed in a way that assigned the extra 20 years, or the ownership of the extra 20 years to the original creator, or his or her heirs, and then they could negotiate with whomever they wanted to negotiate to sell those extra 20 years?
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Mr. PRESTON. Are you talking about works for hire?
Mr. SENSENBRENNER. Both. Where there is an extension.
Mr. PRESTON. As far as works for hire is concerned, there usually is in the contract that the creators of that work may collect performance royalties and mechanical royalties for the term of the copyright. So they would be at a loss of moneys. In other words, even though that composer may have given up his work for hire, he still has the right to collect the royalties, sell the sheet music, videos, whatever way it is used. So there is a tremendous loss of moneys there for the creators.
Mr. WALTON. Mr. Sensenbrenner, I thank you for a penetrating question. Sir, writers and directors do not sell their copyright, only very rarely, in the motion picture industry. One hundred thirty-three years after the Declaration of Independence, something called the work-for-hire doctrine reared its head in 1909 in that Copyright Act. That act and the 1976 amendment give the copyright in an audiovisual work to the employer, the studio or the producer, as long as there is a contract that calls it a work for hire, regardless of whether it truly is.
In addition, if there is an employment relationship between the studio and the writer and the director, the copyright automatically vests in the employer. So no screenwriter who was employed, and it is the vast majority, ever sold or gave away his or her copyright, sir. It was taken from them by the work-for-hire doctrine and essentially handed to the studios.
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Therefore, in answer to your question, would it be a good thing to give the copyright back to the creators, I have to say to you in all honesty, most screenwriters and directors, they never had it. It was taken from them by an act of law and followed up in a copyright circumstance.
However, I do believe that there should be a negotiation for the extended term. Let me make it clear that the three guilds that I am honored to speak for here todaythe Writers Guild, the Directors Guild, the Screen Actors Guildare in favor of the extension, but we believe that those who own the copyrights ought to be able to exploit them on a basis which we still think is limited, and we support that.
What we say is, however, in extending that, whether the windfall be small or whether it be a breeze, there should be a negotiation, there should be a process whereby the human creators get to share in that windfall or that breeze, whatever the size; and whether that negotiation takes place with them having the copyright, the studios or the screenwriters, et cetera, is, I think, probably a moot point.
I think that Congress is not going to go back and so drastically rewrite the copyright laws. But it is not too much to ask, I hope, that the law be modified to encourage that negotiation, which, by the way, will never take place unless the Congress acts.
Mr. SENSENBRENNER. Emphasizing that point, aren't you at a significant disadvantage, because if Congress extends the copyright for 20 years, the motion picture industry, or if there is something similar in the other industries, can't they just turn around and say to those who represent the creators of the copyrightable work, or their heirs, to buzz off and stick the law with the extra 20 years in their pocket and go running off to the bank and not give the creators and the heirs a nickel?
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Mr. WALTON. I didn't realize that you were such an astute observer of the history of the motion picture industry, Mr. Sensenbrenner. You are absolutely right.
Mr. SENSENBRENNER. I yield back the balance of my time.
Mr. ATTAWAY. May I respond just very briefly?
Mr. DELAHUNT. Because we are in a limited time period, I am not going to ask you that question. I am going to pick up on exactly the point that Mr. Sensenbrenner was making.
I sense there is near unanimity, with the exceptionand I think he is expressing some reservationsof Professor Reichman, about the sensible and cogent arguments that we ought to extend copyright. We are now in a global economy, and we certainly do not want to lose our competitive edge in the one area where we seem to be doing best in terms of trade relations, which is intellectual property.
I thinkmaybe I am wrong, but I think I heard Mr. Attaway say today in his reference to collective bargaining that this is new ground for those that he represents. If that be the case, because I share the same concerns as Mr. Sensenbrenner, if there is going to be a windfall, it ought to be shared equitably.
I happen to be, after listening to this testimony and doing some research, very much in favor of extension. I think this has to be done, for a variety of reasons.
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I will close this long-winded question to Mr. Attaway. I would hope that despite the misgivings of Mr. Walton and Representative Sensenbrenner that the industry would be willing to commence good-faith collective-bargaining-type negotiations now in anticipation of Congress' acting on this, so that we could expeditiously see this law to a fulfillment and conclusion.
I would like you to respond, given the question posed by my colleague from Wisconsin. Mr. Attaway, could you please respond to that suggestion?
Mr. ATTAWAY. Thank you. For the third time today, I would like
Mr. DELAHUNT. We would like to hear it again and again, just to etch it into that public record.
Mr. ATTAWAY. The studios are anxious to sit down with the guilds and negotiate a fair sharing arrangement for revenues received during an extended term. We want to do that in the context of collective bargaining, which is how we determine the sharing across the board for the contributors to motion pictures.
The statement was made earlier, the implication was made that writers, directors and actors received nothing for pre-1960 films. That is not entirely true. When the guild agreements were negotiated, the studios agreed to form a pension fund and to fund that with, I think the sum was a little over $3 million in return for not having to pay residuals for pre-1960 films. That pension fund has grown to over $1 billion today. Money has been paid.
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Mr. DELAHUNT. Thank you, Mr. Attaway.
I am going to give Mr. Walton and Mr. Epstein an opportunity to respond to that, because I think that would be educative for the subcommittee.
Mr. EPSTEIN. May I answer that?
Mr. DELAHUNT. Please do.
Mr. EPSTEIN. Yes, they did give us money. For 55 movies we wrote before 1960, I received $600, or about $20 a movie.
Mr. DELAHUNT. Mr. Walton.
Mr. WALTON. Mr. Attaway is correct that in the 196061 round of collective bargaining in HollywoodI was not present at the timethere was an agreement reached which did, at least for the Writers Guild, create a new pension plan. There was one existing before.
It is true that after a 5-month strike, that negotiation resulted in a collective bargaining agreement which did put $600,000 into a pension plan.
It is true that as part of that agreement, as I understand it, it was understood that the studios would not pay residuals, they never had, on pre-1960 films.
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We don't seek to change that arrangement here today.
I should indicate that one of Mr. Epstein's colleagues, William Ludwig, who by the way, Mr. Weiss, chose to be a lawyer and then got smart and went on to be a movie writer, wrote 38 films prior to 1960. He has received not one penny in residuals for those films. He is alive today, approximately age 85. He receives a pension of $300 a month for what that is worth.
My point is, sir, if I could quickly conclude, that the negotiation can take place. It will take place, as Mr. Sensenbrenner acutely observed, with the studios owning the copyright, given to them by a work-for-hire doctrine enacted by the Congress with us at the bottom of the hill and them at the top.
We are simply saying that if you extend the term of their copyright, which we support, for a 20-year period, or for whatever, that for that period of the extension, you elevate us up a little bit by providing a rider in the legislation that says copyright holders must pay an equitable part.
Mr. DELAHUNT. Mr. Walton, I hear, and some would have Congress become involved in the negotiation. What I am suggesting is that this is an opportunity, and I think that you are hearing todayand I direct this to Mr. AttawayI think you are hearing today an expression of concern about those who have not received their fair and equitable share; and I, as one Member, would like to see that addressed.
Page 124 PREV PAGE TOP OF DOC We also want to extend, because we don't want to lose that competitive advantage and see an exodus of American talent to Europe, which I presume would be something that would be considered by many writers, many creators of intellectual property, and I would hope that the time would not be wasted waiting for Congress. I would think that the kinds of discussions that ought to occur would motivate Congress to move along.
Mr. ATTAWAY. Congressman Delahunt, I don't know any other way to say yes; and I have said it now four times, the answer is yes.
Mr. DELAHUNT. I think we just want to see the results.
Mr. WALTON. Can I just say, I agree? I happen to have taken the red eye to Detroit and then to here, and the reason I was unsure whether I could be here was because I have been involved in negotiations with the studio for a new collective bargaining agreement. I have yet to see a proposal on the table. We will see what happens.
Mr. DELAHUNT. I took the red eye, I will let you know, with Howard Coble from Washington, DC.
Mr. WEISS. Congressman Sensenbrenner, you can see that there is not only trouble up in the stars but right here on Earth. We have a lot of things to straighten out. I just want to bring it back to songwriters. Please, we need this bill very badly. Thank you.
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Mr. DELAHUNT. Can I ask just one final question, and it is not a very practical question. When one of your songs plays on a radio station up in Boston, what kind of money do you receive?
Mr. WEISS. We have people here from BMI and ASCAP who can directly discuss the exact kind of money. But it is a kind of a log system; they monitor certain stations during certain parts of the day and it is based upon the amount of listeners they have. It is not as simple as to say we get $2 or $8.
Mr. DELAHUNT. Without your trade associations, you just wouldn't be able to compete in the open market? The kind of imbalance that Mr. Walton refers to is the same kind of imbalance when your songs are performed; is that a fair statement?
Mr. WEISS. It is not a matter of balance at all, because some songs may get up to 1,000 performances, others may get 2, others may get zero.
Mr. DELAHUNT. My point is that in the open market or in the marketplace, you need trade associations like BMI and others that are represented here today?
Mr. WEISS. These trade associations represent us. They make it easier for us and the users, who otherwise would have to search hundreds and thousands of copyrights to decide who to pay. But these people represent usthey collect for us, they track our songs, which we could never do individually, ever.
Page 126 PREV PAGE TOP OF DOC Mr. DELAHUNT. Thank you.
Mr. COBLE. The gentleman from Tennessee.
Mr. CLEMENT. On July 1, 1995, the European Union harmonized the copyright term for all of its member countries at a minimum of life plus 70 years, 20 years longer, as we know, than the United States. What would be the consequences to American songwriters if similar measures are not adopted in the United States?
I would ask Ms. Preston, Professor Reichman or any of the others to respond.
Ms. PRESTON. I am sorry, I really didn't hear all of it, but I think I got the gist of it.
First of all, most of our trading partners have notified us that if the U.S. continues to dismantle the copyright protection here in the United States that there will be problems against the U.S. trade organization, and the threat has already come to fruition with Ireland that has now filed such a case.
There is also a word that we use, ''reciprocity.'' In other words, if we don't pay for certain areas of music here in the United States, then they will deduct those areas of music from use, from us, throughout the world. In other words, in the case of the restaurants, if we don't collect from restaurants, we won't be able to collect from Europe for the use of our music in restaurants. So there are many consequences that our writers and publishers will suffer if we try to dismantle the U.S. copyright law and we do not grant extension of our copyrights.
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Mr. REICHMAN. Thank you for your question. You are quite right. As the EC directive is written, there is a mandatory application of the rule of the shorter term. Therefore, if we did not move to life plus 70 years and the work is considered the work of an individual author, as it would be in the case of songs, it would likely enter the public domain in Europe.
There are two questions that have been raised. There was the ECJ's Phil Collins decision regarding the free flow of goods within the Community, which raises some questions about whether the EC's rule of the shorter term violates the Treaty of Rome. There is a second question of whether the rule, as enacted in the EC directive, might not violate the MFN clause of the TRIPS Agreement. So there may be some legal cloud over their implementing the directive as written, but short of that, there is no doubt that U.S. works would go right into the public domain after expiry of a life plus 50 term if we did not enact the life plus 70 proposal.
I wonder if I may add one thought about the equity question that was raised. It is very gratifying to hear about the negotiations that you are proposing, and I think that is a move in the right direction. I would hope that that you will not lose sight of the equity in the position of American authors who sell a derivative work rights in the United States, because I would not want the American underlying work holder to be treated worse than he would be with respect to foreign derivative work holders under the Restoration of Copyrights Act.
Under our restoration act, there has to be an equitable renegotiation to make sure that the value of the license under the derivative work reflects fair market value when the foreign copyright is restored. I would certainly urge that you add some language dealing with American derivative work licensors so that, under the extended term, they would obtain immediate and truly equitable compensation for continued use of underlying works in the extended derivative works.
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You wouldn't want to end the term of the derivative work, because the derivative work holder would normally have invested a great deal of money in making the derivative work; but it does seem to me that since neither party could have foreseen the extended 20-year term, the original contract ought to be equitably revised to reflect current market values.
Ms. PRESTON. If I might add to my answer, if you ask what the cost is in dollars, at the rate of this present year, that would be a half a billion dollars in performing rights to writers and publishers in this country. So that is a half a billion dollars in U.S. trade there.
Mr. CLEMENT. Thank you, Mr. Chairman.
Mr. COBLE. Mr. Sensenbrenner has a plane to catch, so if you will, Professor, I would like for you to respond in writing rather than take additional time.
In your testimony, you made several references to the fact that the U.S. copyright protection meets the minimum standards required under international law. Please tell meand I am not challenging you why you believe that the United States should simply meet the minimum and not offer the highest level copyright protection when it is my belief that the United States would lose millions of dollars of export revenue if the copyright term is not extended. If you wouldn't mind responding to me in writing, I would appreciate that.
Mr. REICHMAN. Let me clarify that my concern deals primarily with software production and other information tools.
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Mr. COBLE. If you will give it to me in writing, because he is on a short leash; I am trying to accommodate Mr. Sensenbrenner.
[The information follows:]
Chairman Coble asks why we should not give more copyright protection than international law requires. There are several reasons for this, which interrelate with one another.
First, international copyright standards are now very generous, and they reflect a century of experience from which a consensus has emerged. That consensus helps to avoid imbalances in international trade if one state overprotects and other states underprotect. In principle, overprotection at home will gradually render domestic firms less competitive in third markets than firms operating under more competitive conditions in their home markets. Our strength comes from being the most competitive and technologically innovative country on Earth. Because I fear that other countries are increasing their ability to compete in the global information economy, I do not want ill-advised tinkering with the copyright laws to make us more protectionist than our present and future competitors.
Second, it is a mistake to assume that America's dominant position in any given sector, including entertainment, is an everlasting static condition. Even with regard to musical works, we should not forget the tribute paid to the U.K. for the Beatles and, in my youth, to Latin American composers. I am especially worried about innovative computer programs and telecommunications technologies beginning to emerge from Malaysia, India, Japan, Brazil, and even China, not to mention the Western and Eastern European countries, which we will not want to protect any longer than necessary, in order to remain competitive and to reduce long-term strains on our balance of trade. As one who has taught international law for many years, I can assure you that past attempts to lock in short-term trade benefits by rigging the rules often boomeranged against their proponents. Moreover, aggressive use of the rule of the shorter term would be needed to override the rule of national treatment, at least in our domestic market, but this has not always proved politically expedient in the past.
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Third, the public acquires rights of its own in intellectual creations because, without the temporary monopoly of, say, copyright law, and the tax on users it implies, creators could not put legal fences around their intangible productions. Anyone could take any work that was made available to the public because authors could not trespass on the free-riders' property to prevent the use of a public good. Instead, copyright law solves this problem by trading a monopoly that is limited in time for eventual public ownership of all intangible creations. In other words,the public becomes the remainderman under all copyright lawsand this has been made a Constitutional requirement in the U.S. When you overly protect the creator, you risk damaging the public interest, you reduce the public's remainderman estate, and there is tension with the ''limited times'' clause of the Constitution.
Fourth, even when copyrights expire, the creators' trademarks carry on for as long as the owners desire. This ensures that very famous creations and characters cannot altogether be freely exploited by third parties, even if single works fall into the public domain because their copyrights expired. Third parties cannot confuse or deceive the public with regard to the source of origin, nor can they dilute famous marks by associating them with their own unrelated goods. The perpetual nature of trademarks thus preserves and enhances competition without creating legal monopolies or barriers to entry. Once the ''limited times'' for exclusive rights allowed by the constitution expires, authors and artists cannot and should not obtain more than what trademark law and the general law of unfair competition give them.
Final, the WTO Agreement, which incorporates the General Agreement on Tariffs and Trade (GATT), as revised in 1994, prohibits the use of intellectual property laws to create disguised barriers to trade. Whenever one country gets too far ahead of the international consensus and begins selectively to tinker with its intellectual property laws in ways that promote only its own trade interests, that sort of strategy will increasingly attract opposition from other countries and could lead to litigation before WTO dispute-settlement panels.
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Mr. COBLE. And, Ms. Preston, will you let me know in writing what sort of additional administrative burdens or duties an extension might impose upon you and your colleagues.
Hon. HOWARD COBLE, Chairman,
|New York, NY, March 6, 1998|
Subcommittee on Courts and Intellectual Property
U.S. House of Representatives
DEAR CHAIRMAN COBLE: During the June 27, 1997 hearing held by you in Nashville, Tennessee, I had the privilege of testifying on behalf of BMI. During my testimony, the issue of copyright term extension arose. You asked me to advise you of ''. . . what sort of administrative burdens or duties an extension might impose upon you and your colleagues.''
I recently reviewed a portion of the hearing record and realized that I had not answered your question. Please excuse my inadvertent non response. I want to assure you that my failure to respond was not intentional on my part.
Page 132 PREV PAGE TOP OF DOC If the term of copyright were to be changed from the current term of the life of the last surviving author plus 50 years to the life of the last surviving author plus 70 years, no additional administrative burden would be placed upon BMI. We would continue to monitor the public performance of those musical works in the BMI repertoire. Our responsibilities would remain the same but for the fact that we continue our work on behalf of our affiliated songwriters, composers and music publishers for an additional twenty years. The increase in the number of musical works in our repertoire will be easily accommodated by our sophisticated computer systems.
Chairman Coble, if you would like any additional information please feel free to call upon me.
|Frances W. Preston,|
|President, Chief Executive Officer.|
Lady and gentlemen, thank you all very much for being with us.
I will introduce the third panel as they come forward.
Our first witness is Bob Sterling, who is testifying on behalf of the Coalition for the Protection of America's Gospel Music Heritage. Mr. Sterling's songs have been recorded by a variety of Christian artists, notably including Sandi Patty and Point of Grace, and his tunes have worked their way to the top of the Christian radio charts many times. His extensive body of choral composition arrangements can be found in the catalogs of Word Music, Belwin Mills, Shawnee Press, Genevox Music, and Meadowgreen Music.
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Mr. Ed Atsinger is president and chief executive officer of Salem Communications Corp., which operates 44 radio stations throughout the United States. He is also chairman of a committee of approximately 700 religious, classical and other specialty format radio stations that use limited amounts of copyrighted music in their broadcast day.
Dirk Hallemeier is a partner with Radio Property Ventures which operates three religious format radio stations. He is vice chairman of the National Religious Broadcasters Music License Committee which represents approximately 700 specialty format radio stations in music licensing negotiations and proceedings.
And Mr. Marvin Berensonand, Marvin, I am told that you are general counsel at Broadcast Music Inc., but you are here to respond to questions and will not give oral testimony; is that right?
Mr. BERENSON. That is correct.
Mr. COBLE. Good to have all of you with us.
Mr. Atsinger, do you want to start it off?
STATEMENT OF EDWARD G. ATSINGER III, PRESIDENT AND CEO, SALEM COMMUNICATIONS CORP.
Mr. ATSINGER. Yes, Mr. Chairman.
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Mr. Chairman, I have prepared a full written statement, and I ask your consent that it be included in the record.
Mr. COBLE. Without objection.
Mr. ATSINGER. In addition, I have brought with me letters supporting the need for a fair per program license from four well-established, broad-based Christian groups, the Christian Coalition, the American Family Association, Focus on the Family, and the National Religious Broadcasters, and I would ask that they be included in the record as well. I should note that these are well-known and respected groups that traditionally speak for broad-based Christian interests.
Thank you for the opportunity to be here today and to testify. My name is Edward G. Atsinger III. I am the president of Salem Communications Corp., which operates 44 radio stations throughout the United States. I am also chairman of the National Religious Broadcasters Music License Committee, a committee of approximately 700 religious, classical and other specialty format radio stations that use limited amounts of copyrighted music in their broadcast day. Although I operate a number of radio stations, a great number of the stations that the NRBMLC represents are small businesses and single-station operations that can only be heard through the voice of our committee.
So, Mr. Chairman, I want to thank you again for your interest in our concerns and for the time that you have spent to help address these issues of fairness in music licensing. I am here to make a simple key point. Radio stations that make limited use of copyrighted music should be able to pay for that music in a manner that fairly reflects that limited use.
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The common denominator that brings our diverse group of stations together is our limited use of copyrighted music. Our stations feature performances of copyrighted music relatively infrequently. We derive little revenue from those performances. Our religious stations offer mostly teaching, Bible study, preaching and informational talk programming. Our classical stations use music that is primarily in the public domain. Our use of music is very different from the great majority of radio stations.
Popular music stations rely almost exclusively on copyrighted music. In fact, the record of our rate court trial demonstrated just how much music those stations use. The typical station I am referring to plays ASCAP music in more than 90 percent of their program hours. BMI claims that its music use is more than ASCAP's. Those are the stations that need and use a blanket license; the blanket fee pays for all of that music. We do not need and should not have to pay for that kind of blanket license.
Nor do the current per program licenses offer real, reasonable alternatives. It simply is not fair that one of our stations that features even a single BMI song in just 30 percent of its program periods should have to pay the same music fee as a station that relies upon music all day, every day. Likewise, it is not fair that a station that uses one ASCAP song in just 10 percent of its program hours should have to pay ASCAP over 40 percent of the blanket license fee.
In each of these situations, the stations also must take on an internal administrative burden that adds significantly to that cost. We seek reasonable alternative licenses from ASCAP and BMI that allow us to pay in proportion to the amount of music we use.
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I should emphasize that we do not question the need to pay for copyrighted music. My own company, Salem Communications Corp., is the largest syndicator of Christian music in the United States. We offer three distinct Christian music genres daily to over 170 radio stations across the United States, the majority of which feature music full-time, 24 hours a day. So we have a great deal of personal incentive to encourage the creation of new music product in this Christian genre, and we have invested a great deal of money to that end. But those stations are stations that play music all day long and those stations need to take the blanket license. The group that we represent, for the most part, are very limited users and that is my focus today.
So, to the contrary, we strongly support the right of songwriters to get paid for use of their work, but the system should be fair to both songwriters and to broadcasters.
Our goal should have been long ago achieved. The antitrust decrees that govern ASCAP and BMI obligate them to offer per program licenses on terms and conditions that offer a real and fair alternative to the blanket license.
Let me illustrate the deep sense of abuse felt by many of the member stations that we represent. In 1950, the ASCAP consent decree was entered into the court. I believe it was February 1950. As late as 25 years later, the mid-1970's, 1975 to 1977 even, 27 years later, of the 6,000 or 7,000 commercial radio stations existing in the United States there was not a single radio station, to the best of my knowledge, that took a per program license that was offered, and they didn't take it because it was not usable. It was an impossible license, and I believe it was designed to be impossible.
Page 137 PREV PAGE TOP OF DOC Since 1978, there were some improvements made and the license began to be usable by a small number of stations. But it is still wholly inadequate. Regrettably, ASCAP and BMI have decided that it is in their business interests to resist this obligation to offer a fair per program license and to resist it at every turn.
But don't take my word for it. In 1993, in a court case dealing with the television industry, a respected magistrate judge in the ASCAP rate court came to an identical conclusion. Quoting from his opinionhe said, and I quote, ''Since the early 1940's, ASCAP has viewed the per program license as inconsistent with its business interests ''and ASCAP'' has long resisted the use of the per program license in both radio and television.''
Why is that? Because the blanket license destroys music license competition. Once a station has a blanket license, it has no incentive to shop for other sources of music or other types of programming, because if it reduces its reliance on, say, ASCAP's music, it doesn't realize any savings. There is no economic incentive to control its use of music; in doing so, it doesn't save any money. Thus, it perpetuates ASCAP's and BMI's monopoly power.
And it is monopoly power. Every radio station, as a practical necessity, must have a license from both ASCAP and BMI. Why is that so? While stations can control much of the music that they play, there is a good bit that they cannot control. For example, our stations often cover live church services. We cannot always anticipate in advance what would be played. We cover other live programming. We receive almost on a daily basis PSA's and programs that are prerecorded from a variety of organizations which we have no control over the music.
It is important to keep this extraordinary monopoly power in mind when ASCAP and BMI argue, as they often do, that Congress should not interfere in the operation of the marketplace. This is not a free marketplace, it is not a level playing field and that is why the Justice Department sued them in the first place.
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The performing rights organizations are creatures of the Copyright Act, which is an act of Congress. Congress has a duty to ensure that these organizations do not abuse their market power, the market power that Congress has given them.
Mr. Chairman, we have been seeking fair licenses for more than 15 years. In that time we have traveled to New York, the home of ASCAP and BMI, to seek justice in ASCAP's rate court. ASCAP'S intransigence and the lack of clarity in ASCAP's antitrust decree forced us to spend a very large sum of money to go to trial last September. We still do not know how the judge will rule, but however he rules, we are assured of one thing and that is that there will be continued litigation with ASCAP and BMI for years to come unless Congress acts. That is something we simply cannot afford. Thus we ask Congress for help.
Thank you for your attention.
Mr. COBLE. Thank you, Mr. Atsinger.
[The prepared statement of Mr. Atsinger follows:]
PREPARED STATEMENT OF EDWARD G. ATSINGER III, PRESIDENT AND CEO, SALEM COMMUNICATIONS CORP.
Mr. Chairman. My name is Edward G. Atsinger III. I am the President and Chief Executive Officer of Salem Communications Corporation, which operates 44 radio stations throughout the United States. I am also the Chairman of a committee of approximately 700 religious, classical and other specialty format radio stations that use limited amounts of copyrighted music in their broadcast day. The Committee was formed and operates under the auspices of the National Religious Broadcasters association and has received the endorsement of the Classical Music Broadcasters Association. Although I operate a sizable group of radio stations, a great many of the stations we represent are small mom and pop operations that can only be heard through the voice of our Committee.
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On behalf of myself and our Committee, I want to thank you for your interest in this issue and for the time and attention you have spent to help address the fundamental issues of fairness and equity that are involved in these music licensing disputes. I also I want to thank you for inviting me and my colleague Dirk Hallemeier, a partner in Radio Property Ventures of St. Louis, to testify at this hearing. I hope that we will be able to shed some light on the anti-competitive methods used by ASCAP and BMI to evade the responsibilities of the antitrust decrees under which they operate. We will also give you our views about how Congress can help make the important changes that are necessary in music licensing to stimulate competition and more closely resemble the free market.
We are here for two simple, fundamental reasons. We believe:
We should be able to pay for music in a manner that is roughly proportional to the limited amount of music we use, compared to the vast majority of the radio industry; and
We should have a practical way of determining what it is we are paying for.
What brings our diverse group of stations together is one important aspect of our programming, our limited use of copyrighted music. The stations represented by our Committee feature performances of copyrighted music relatively infrequently, and typically derive little revenue from those performances. Contrast that with the overwhelming majority of the industrytop 40, country music, adult contemporary, or other popular music formatsthat rely almost exclusively on copyrighted music for their programming and revenue, performing on average eleven copyrighted titles each hour, 365 days a year. In fact, information disclosed on the public record of our Rate Court trial demonstrated just how music intensive most of the radio industry is. In 1995, for example, between 60 and 70 percent of the stations in the industry made an ASCAP feature performance in more than 90% of their program hours. I could give you much more detailed information demonstrating just how much the mainstream stations that use the blanket license depend on copyrighted music, but ASCAP is hiding this basic performance information from Congress behind claims of confidentiality. Unlike those stations, we do not need, and should not have to pay for, the same kind of round-the-clock ''blanket'' license desired and negotiated for by the vast majority of radio stations. Our mandate is to obtain a reasonable alternative license from ASCAP and BMI that recognizes these essential differences in format.
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I should emphasize that we do not question the need to obtain licenses for the radio performance of copyrighted music. Our problem is how the fees for those licenses are set, and what those licenses require.
We have been seeking fair alternative licenses for more than fifteen years. In that time, we have traveled to New York, the home of ASCAP and BMI, to seek justice in the ASCAP Rate Court. ASCAP's intransigence, and the lack of clarity in the applicable antitrust decree, forced us to spend $1.5 million to go to trial on a case last September that should have been resolved in our favor as a matter of law. We still do not know how the judge will rule. But, however he rules, we are assured of continued litigation for years to come unless Congress acts. That is something we simply cannot afford.
Thus, we have been seeking fair alternative licenses in Washington. We now have traveled here, to Nashville, the second home of ASCAP and BMI, to present our case to this Subcommittee. ASCAP has threatened to terminate licenses of stations we represent on specious and hyper-technical bases strictly to discourage our challenges to their anticompetitive licensing practices. I have been forced to face personal attacks using my own information that ASCAP requires to be filed in confidence under its licenses.
We have very little to show for these years and millions of dollars of effort. In the glare of Congressional scrutiny, ASCAP and BMI have made some changes to their practices. However, these changes have been largely cosmetic, to add rhetorical support to their position. There has been no real reform.
Page 141 PREV PAGE TOP OF DOC Our goal should have long ago been achieved. The antitrust decrees that govern ASCAP and BMI resulting from suits brought by the Justice Department obligate those organizations to offer a type of license that should be roughly proportional to music usethe ''per program'' licenseon terms and conditions that offer a real, and fair alternative to the blanket license. Regrettably, rather than playing by the rules, ASCAP and BMI have deemed it to be in their business interests to resist this obligation at every turn. The ASCAP Amended Antitrust Decree was entered in 1950. To the best of our knowledge, as late as 197727 years latervirtually no radio station in the U.S. held a per program license.
Even now, the per program licenses offered by both organizations are designed to limit their use and defeat the goal of proportionality. With ASCAP's current license, for example, a station that makes a feature performance of even a single ASCAP composition in just 10% of its program hours (weighted to account for the different revenue value of different times of day) will pay fully 40% of the fee that station would pay under the blanket license. BMI's current license is even worse, with the per program license costing more than the blanket license for any station featuring any BMI music in about 30% of its weighted 15 minute long programming periods. In addition, a station's ability to use the per program licenses now offered is further reduced by burdensome and unnecessary administrative and reporting requirements and penalties for unavoidable reporting errors.
But don't take my word for it. In 1993, after a searching review of the record, a respected Magistrate Judge in the Southern District of New York, the ''Rate Court'' charged with overseeing ASCAP licensing found: ''since the early 1940's, ASCAP has viewed the per program license as inconsistent with its business interests . . . [and] has long resisted the use of the per program license in both radio and television.'' United States v. ASCAP (Application of Buffalo Broadcasting Co.), 19931 Trade Cas. (CCH) 70,153 at 69,083 (S.D.N.Y. Feb. 26, 1993) (hereinafter, ''Buffalo Broadcasting''). That resistance continues to this day; to this very hearing.
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On top of that, ASCAP and BMI continue to refuse to tell us, in any reliable way, what songs are in their repertories. While some progress has been made in this area, it is not enough. We still cannot make meaningful decisions about music use with the information provided by ASCAP and BMI. We are told by ASCAP and BMI that we are buying unlimited ''access'' to their repertories. In fact, we are reluctant participants in a forced sale, because we cannot choose one repertoire in favor of the other. Let me explain.
I. ASCAP AND BMI RESISTANCE TO BLANKET LICENSE ALTERNATIVES
Every radio broadcaster must, as a practical matter, have a license from both ASCAP and BMI. Music appears in syndicated programs, live church services, other live events and even public service announcements and commercials. That music is about equally divided between ASCAP and BMI. The broadcaster has no control over many of these sources. He or she cannot decide to avoid all use of ASCAP music, or all use of BMI music. Without both licenses, a broadcaster will be sued for copyright infringement.(see footnote 1) Thus, ASCAP and BMI do not compete with each other. Each is a pure monopolist. Radio stations must deal with both, and must take the licenses that are offered.
It is important to keep this extraordinary monopoly power in mind when ASCAP and BMI argue, as they often do, that Congress should not interfere in the operation of the marketplace. This is not a free marketplace. It in no way resembles a free marketplace. ASCAP's position to this Committee has always been take what we are offering or take us to court. I know of no free market that operates in this manner. The performing rights organizations are creatures of the Copyright Act, which is a creature of Congress. Congress has a duty to ensure that these organizations do not abuse the market power with which they have been invested.
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A. The Blanket License
Both ASCAP and BMI have recognized that their extraordinary market power can be best exploited using a form of license called the ''blanket license.'' Under a blanket license, a radio station obtains the right to use all music in the organization's repertory all day long for a fee which is calculated as a percentage of the station's revenue. Of course, that fee is based upon the large amount of music that could be used under such a license; upon the large amount that is used by the great majority of stations in the industry.
Why do ASCAP and BMI like the blanket license so much? First, it requires very little administration. Licensed stations simply pay their fees. ASCAP and BMI need do nothing but collectplus, they get a raise every time the station's revenue grows, regardless of music usage. Second, a station on a blanket license has no incentive to limit its use of ASCAP or BMI music. Thus, more music is used, and that makes ASCAP and BMI and their writers and publishers happy, and enables ASCAP and BMI to justify even higher fees the next time around. Third, any station that does limit its use of music pays the same as if it were an all-music station, so ASCAP and BMI collect more money. Finally, a station with a blanket license has no incentive to find alternative, competitive sources of music, to substitute the music of one organization for that of another, or to seek out non-music programming. In short, the blanket license perpetuates the anti-competitive status quo. ASCAP and BMI like that just fine.
As the Magistrate Judge found in the Buffalo Broadcasting case: ''ASCAP's market power . . . is most clearly exercised by its preference for the blanket license.'' Buffalo Broadcasting at 69,680. ASCAP's Rate Court Judge further relied upon what he described as ASCAP's ''use of the blanket license as a means to extract non-competitive prices.'' United States v. ASCAP (Application of Capital Cities/ABC), 157 F.R.D. 173, 177 (S.D.N.Y. 1994). Thus, a fair alternative to the blanket license is essential.
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B. The Per Program License
The Department of Justice early on recognized the threat to the market posed by the blanket license. In 1941, to settle an antitrust suit it brought, the Department entered into a consent decree with ASCAP obligating ASCAP to offer a ''per program'' license in which the fee charged varies with the number of programs that use ASCAP music. The provisions governing the per program license were strengthened in the amended final judgment entered in 1950 between the Government and ASCAP. United States v. ASCAP, 195051 Trade Cases (CCH) 62,595, §VII(B) (S.D.N.Y. March 4, 1951) (the ''Amended Antitrust Decree'').
The per program license was established as the preferred form of licensethe only type of license ASCAP was required to offer. Buffalo Broadcasting at 69,685 (citing Amended Antitrust Decree, §VII (A) & (C)). In fixing fees for its licenses, ASCAP was ordered:
To avoid any discrimination among the respective fees fixed for the various types of licenses which would deprive the licensees or prospective licensees of a genuine choice from among such various forms of licenses.
Amended Antitrust Decree, §VIII. The Amended Antitrust Decree was intended to bar ASCAP from ''denying a per program license to eligible licensees by overpricing it in comparison to the blanket license.'' United States v. ASCAP (Application of Turner Broadcasting System, Inc.), 782 F. Supp. 778, 812 (S.D.N.Y. 1991).
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BMI entered into a similar decree in 1966, which required BMI to offer a per program license and to price it in relation to the blanket ''so that there would be no frustration of the purpose . . . to afford broadcasters alternative bases of license compensation.'' United States v. BMI, 1966 Trade Cases (CCH) 71,941 (S.D.N.Y. 1966).
As the ASCAP Rate Court has held, the ASCAP Decree made the per program license the preferred alternative, in order to ''serve as a counterbalance to ASCAP's market power.'' See Buffalo Broadcasting at 69,680, (quoting Turner, 782 F. Supp. at 810). The Court recognized, as other courts have recognized before, that the per program license itself was intended to provide competition to the blanket license, and opened additional competitive possibilities. Buffalo Broadcasting at 69,683. See also ASCAP v. Showtime/The Movie Channel, Inc., 912 F.2d 563, 570 (2d Cir. 1990) (per program license provides an incentive to seek source or direct licenses).
In theory, for example, under a per program license, if ASCAP music was priced too high in relation to BMI music, a broadcaster using a per program license could substitute BMI music for ASCAP music. Or a broadcaster could enter into direct licenses with large publishers, or use music from a music library with rights already cleared. Further, a realistic per program license could even stimulate the formation of new, competitive music licensing sources, just as its absence could destroy such competition.
C. ASCAP and BMI Resistance to their Per Program Obligation
Page 146 PREV PAGE TOP OF DOC Ever since entering into their antitrust decrees, ASCAP and BMI have fought tooth-and-nail against offering a real per program license. Our Committee has been seeking such a license for years. The organizations have consistently refused.
The local television industry also had for years sought a real per program license alternative. That industry spent close to ten years and ten million dollars fighting with ASCAP, first in an antitrust suit and then in the Rate Court, over the per program license issued to television. ASCAP offered television a per program license with a four to one fee rate ratio modeled after its radio industry licenses. As I noted above, after a lengthy trial in 1993, the court found that ''since the early 1940's, ASCAP has viewed the per program license as inconsistent with its business interests . . . [and] has long resisted the use of the per program license in both radio and television.'' Buffalo Broadcasting at 69,683. The court further found, with respect to ASCAP's four to one fee rate proposal that ''ASCAP's per program proposal is designed to further its aim of keeping the per program license technically available, but practically illusory for virtually all stations.'' Buffalo Broadcasting at 69,685.
The Court rejected ASCAP's four-to-one proposal and opted for the very reasonable conclusion that the relationship between blanket and per program license fees should be set so that a station using music in a manner consistent with the industry's average use would pay about the same under the blanket and per program licenses. Users of less music would pay proportionally less. In this way, the court found that the per program license would serve its goal of serving as a genuine alternative.
This is the concept behind the per program license our Committee seeks for radio. Such a license would ensure that the per program license fulfils its pro-competitive purpose. It would produce a per program license fee that charges a station roughly proportionally for music use compared to the industry average.
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Shortly following this decision in the television case, the NRBMLC filed a Motion for Summary Judgment in the same court. This motion asked the court to decide the NRBMLC pending rate court cases on the established law that was enunciated so well in the television case. After all, the same decree provision governed radio and television and the purpose of the per program license should be the same in both industries.
ASCAP fought this motion. Although it had argued in the television case that the per program licenses for television should be modeled on the radio license, ASCAP argued in our case that radio and television were different. The Court declined to rule on summary judgment, finding that, while the formula adopted in the TV cases was reasonable, it was not the only possible result mandated by the ASCAP Antitrust Decree. Thus, the Court held that we would be required to create our own trial record. So we went to trial last September in New York, spent a great deal of money, and await the Court's decision.
Regrettably, once we hear from the Court, a positive outcome for us would only deal with licensing periods from 1983 through 1995. ASCAP has made clear that it will appeal any decision in our favor. Further, ASCAP will fight the license we seek for 1996 through 2000. Thus, we still will need to litigate over and over again. And then we must deal with BMI, which is likely to say that the Court's decision concerned ASCAP and BMI has more market share than ASCAPtake what we offer or we ll see you in our own Rate Court.
Our group of stations simply do not have ten million dollars, or even another one million dollars to keep going into court and litigating over the same issue that was first resolved as a result of ten years effort and millions of dollars by the local television industry. Nor would a rational system require the issue won at great cost by the television industry to be fought again and again and again.
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An appropriate relationship between blanket and per program license fee rates is mandated by the ASCAP and BMI decrees. It should be fixed as a matter of law. H.R.789 would do just that.
D. The Effect of ASCAP and BMI's Per Program Licenses
The per program licenses now offered by ASCAP and BMI to radio are designed to charge stations at a rate much higher than the corresponding blanket licenses. The effect of these licenses is to charge far more than the relative music use of the station should justify. For example, the BMI blanket license fee is set at about 1.6% of revenue net of certain items. Keep in mind, that for most stations, virtually all revenue is attributable to program periods containing feature performances of music. The per program fee is set at 4% of revenue (net of certain items) attributable to program periods containing feature performances of music plus an additional .24% of revenue for incidental performances. Until recently, the relationship between ASCAP's blanket and per program licenses was even worse. The blanket fee rate was about the same as BMI's and the per program feature rate was set at 4.22% of revenue from programs with feature performances, plus the additional incidental performance fee.
The net result of these licenses can be seen in Tables 1 and 2a. Under the BMI license offered today, a station that plays a single feature BMI performance in just 30% of its programming periods (weighed to account for revenue differences) would pay more than it would pay under the blanket license. Very few stations can use such a license, and those that can pay much more relative to their music use than typical radio stations pay under the blanket license. See Table 1. Under the license offered by ASCAP until 1996 there is a similar result. See Table 2a.
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Equally troubling is that under the ASCAP license, a station that featured a single performance of ASCAP music in just 10% of its weighted program hours would pay a full 40% of the blanket license fee (the fee it would have paid as a full time hit music radio station). Under the BMI license, a station that featured a BMI performance in just 20% of its weighted program periods would, likewise pay 72% of the blanket license fee.
I should add that the tables understate the differences between the per program and blanket licenses. BMI's blanket license permits the station to deduct advertising agency commissions of up to 15% of revenue plus certain talent and news service fees. No such deductions are available under BMI's per program license. In order to be conservative, Table 1 reflects a 10% agency deduction and no other deductions. ASCAP's blanket license, but not its per program license, includes similar talent and news service deductions. No such deductions are reflected on Tables 2a or 2b.
In part because it could not justify a per program license that was only available to stations performing ASCAP music in less than a third of their programs, ASCAP revised its per program license in 1996. The new license allows ASCAP to argue that the license can be used by stations with ASCAP feature performances in about half of their programs. But that does not begin to tell the story. First, ASCAP front-loaded the license to ensure that its benefit to stations would be dramatically reduced. The incidental performance fee remained the same as under the prior per program license, as did the fee for the first ten percent of a station's programs containing feature performances. Thus, a station featuring an ASCAP performance in ten percent of its program hours would still pay 40% of the blanket license fee. See Table 2b. Second, as with ASCAP's and BMI's prior licenses, the new license imposes unreasonable and unnecessary reporting burdens that makes it even more expensive to use.
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It is instructive that ASCAP did not negotiate this license with our Committee. Once again, we were presented with a ''take-it or take us to court'' choice. Needless to say, the new ASCAP license does not come close to the concept of average station fee equivalence adopted by the Buffalo Broadcasting court.
E. The Administrative Barrier To the Per Program License
Fee discrimination is not the only barrier created by ASCAP's and BMI's per program licenses. The per program license imposes unduly burdensome, and wholly unnecessary, bookkeeping and reporting requirements that add to the cost of the license and make it even less available to stations. These are coupled with significant penalties should a broadcaster make a mistake, to further deter use of the license.
First, reporting requirements. Per program license users are required to file monthly logs which report every feature performance of music used on every program that the user does not concede to contain ASCAP or BMI music. What do ASCAP and BMI require per program license users to report for each song? The full title, name of composer, author, and publisher, and name of the performing artist in a sound recording. ASCAP also requires the record company, and all information relating to composer, author, and publisher shown on the record label. Should a radio station omit any information needed for identification, the ASCAP per program licenses creates an automatic presumption that music is licensed by the organization, and a fee must be paid. BMI's license is even stronger, creating a presumption that a fee must be paid if any of the required information is missing.
Page 151 PREV PAGE TOP OF DOC How much of this information is necessary? Well, when ASCAP itself tracks musical performances for purposes of awarding royalties to its members, it requires its trackers to report only the author and title of composition. That's it. The rest is unnecessary for ASCAP's purposes.
Although this burden varies from station to station, it is not uncommon for stations to devote many hours each month to the completion of ASCAP's reports. For classical stations, which perform music all day long, the work can be enormous.
Religious stations face their own difficulties. Much of the music performed on religious stations is contained in syndicated programs. Thus, the broadcaster must rely on information from the program producer, often a small church or ministry. These reports are often late, incomplete, and inaccurate.
Not only are these reporting requirements onerous, they are wholly unnecessary. Music use can be determined on the basis of a representative sample of periods. Random sampling in several months selected by ASCAP and BMI could provide the information necessary to calculate license fees without creation of yet one more hurdle to the use of the per program license. Indeed, ASCAP's own system of distribution of royalties to its members, which I alluded to earlier, is based on very limited sample surveys. But once again, what's sauce for the goose is, in the case of ASCAP's per program license, not sauce for the gander.
On top of the reporting requirements, the ASCAP and BMI per program licenses add potentially severe penalties should a station make a mistake. The result is that many of the music-poor stations for whom a per program license should be tailor-made simply can't afford to take it.
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Keep in mind that ASCAP's own surveys show that errors in reporting by stations are common and, because of problems such as the inability to verify music played on syndicated programs, inevitable. Nevertheless, the ASCAP and BMI per program licenses provide for severe penalizes against stations for mistakes in reporting music, intentional or unintentional, regardless of whether the mistake even relates to the organization's own music or has any effect on the fee that would be due under the license. Such a system cannot in any sense be said to be reasonable, and presents significant barriers to the per program license being the ''genuine alternative'' that the organizations are required to offer by their antitrust decrees.
II. ASCAP'S AND BMI'S REFUSAL TO IDENTIFY THEIR REPERTORIES
One way for a consumer to reduce the amount of money it pays for a product or a service is to reduce the amount of the product or service that it uses. Such free choice is part of the cornerstone of our society. The law of supply and demand, which holds that when prices go up, demand and use go down, is possibly the most basic tenet of our economy.
Incredibly, the customers of ASCAP and BMI, music users, do not have this fundamental choice. First, as discussed above, the choice is eliminated by ASCAP and BMI's favored blanket form of license. Second, to make such a choice, users need to know what music is controlled by ASCAP and what music is controlled by BMI. In 1994 Congress was incredulous at the revelation that the performance rights organizations do not make known their repertoires in any usable, business-friendly fashion, and made clear its desire that they do so.
Almost immediately thereafter, ASCAP unveiled its ''ACE'' system, touting that one could inquire via modem if a certain work was licensed by ASCAP. BMI said it was working on a program to place its repertoire on an Internet site. Unfortunately, while they offered good public relations, these actions offered little if anything to broadcasters who wanted to manage their music-play. Several months later, when they were finally made public, both systems were unreliable and were difficult and time consuming to use.
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Now, nearly three years later, the systems have improved and both ASCAP and BMI have portions of their repertoires on user-friendly Internet sites. However, the sites are still far from complete disclosures of the repertoires. We have been told that the song titles included in the sites are only those that show up in the royalty distribution surveys conducted by ASCAP and BMI. In fact, each site disclaims any liability for a loss incurred as a result of reliance on the information provided at the site.
We have conducted tests that demonstrate just how incomplete and unreliable the current systems are. My colleague will discuss the results of these tests in his testimony.
The Justice Department recognized the importance of full disclosure of repertory to the fair functioning of the music licensing business. In the 1950 ASCAP Amended Antitrust Decree, ASCAP was ordered:
(i) immediately to respond to written requests from users with respect to specified titles;
(ii) immediately ''to make available for public inspection such information as to the ASCAP repertory as it has;'' and
(iii) within two years of the judgment, to maintain and keep current and make available for inspection, a list of all musical compositions in the ASCAP repertory, which shows the title and other information from which the public can discern copyright and licensing status.
Page 154 PREV PAGE TOP OF DOCASCAP Antitrust Decree, §XIV. The Decree provided a simple remedy for failure to comply with these obligations. Any song not included in the disclosed lists would be deemed not to be a part of the repertoire. ASCAP is barred from charging a fee for such compositions under the per program license and from maintaining litigation concerning unlisted compositions. ASCAP Antitrust Decree, §IV(F). Thus, despite the opposition from ASCAP and BMI, there is nothing new about this remedy, which is precisely the remedy we seek in H.R. 789.
Forty-seven years later, ASCAP still does not make available ''such information . . . as it has.'' This is, after all, the era of the PC and easily maintained data bases. Since the Internet sites do not disclose their entire repertoires, broadcasters must play twenty questions to learn whether a title is in the ASCAP or BMI repertorysending lists of titles to New York or Nashville in order to confirm their licensing affiliation. But there are conditions on that as well. In our experience, lists of songs submitted must be limited to less than 100 titles. ASCAP and BMI take from three to five weeks to respond. I can tell you that you simply cannot run a radio business and make programming decisions on this basis.
In short, users are kept in ignorance, for a reason. If you don't know what you are buying, you can't make the decision not to buy it or to buy it from somebody else. Even if you are on a per program license, the chances are good that you will wake up and find you owe as much or more than you would have on a blanket license. ASCAP and BMI are in the best position to disclose their repertoires. They should be compelled to do so immediately.
III. PROPOSALS FOR CONGRESSIONAL REFORM
Page 155 PREV PAGE TOP OF DOC While many of the principles of the ASCAP Amended Final Judgment and BMI consent decree are sound, the obligations on the performing rights organizations should be strengthened by law. Among the most important points that need strengthening are:
a. the obligation to offer a viable use-based alternative to the blanket license, which is called a ''per programming period license'' in the bill we support, H.R. 789. The relationship of the per programming period license to the blanket license should clearly be mandated as a matter of law, and the burdens caused by use of such license should be minimized;
b. the obligation to provide real-time, on-line access to all titles in their repertory and relevant information concerning the copyrights of those titles, with the remedy for failure being that the work is not considered part of the organization's repertoire.
We thank the Subcommittee for its attention to these important matters. My colleagues and I would be happy to assist the Subcommittee in any way that we are able.
DEAR SENATOR: The entertainment industry is once again mounting a large effort to pass copyright term extension legislation through the Judiciary Committee. The Christian Coalition strongly feels that no copyright extension bill should be passed without attaching the Fairness in Music Licensing bill to it.
|Christian Coalition, |
|Capitol Hill Office,|
|Washington, DC, May 2, 1997.|
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We urge your committee to solve both problems with one legislative vehicle. While the entertainment industry makes some policy arguments that ought to be considered by the committee, there is another equally serious problem with the music portion of the entertainment industry, the unfair and unequal music licensing system that is applied to the religious broadcast community.
Most religious stations play little copyrighted material. Yet they have to pay the same, hefty fees to the music industry that secular stations do that play music all day long. The Fairness in Music Licensing bill would require them to pay fees only for the amount of copyrighted music they actually use on the air. this issue is of critical importance to the nation's religious broadcasting community. It is the only fair and equitable way to treat Christian radio stations.
We urge you to vote for legislation that solves both problems, and to vote against legislation that reforms the copyright extension law without fair music licensing relief for religious broadcasters.
Thank you for consideration of our views.
cc: Hon. Trent Lott.
|Brian Lopina, Director,|
|Governemntal Affairs Office.|
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Hon. Don Nickles.
DEAR MEMBER OF CONGRESS: I strongly urge you to cosponsor S. 28 and H.R. 789, the Fairness in Musical Licensing Act of 1997. both bills were recently introduced by Senator Strom Thurmond and Congressman Jim Sensenbrenner and would initiate reforms in the music licensing system.
|American Family Association,|
|Tupelo, MS, May 28, 1997.|
Under the current system, religious broadcasters have little choice but to purchase expensive ''blanket'' music licenses despite the fact that they use very little copyrighted music. Religious broadcasters are perfectly willing to pay for any copyrighted music they use on-air, and have been asking for years for the creation of a usable, economically viable ''per program'' license.
Despite these efforts, the performing rights organizations like ASCAP and BMI have resisted any reform. Instead, ASCAP and BMI seek to perpetuate an inequitable licensing system which gives them extraordinary, monopolistic control of the music market.
The Fairness in Musical Licensing Act of 1997 is sorely needed. It does not affect the important right of music composers, producers, artists and publishers to be compensated for the use of their work by radio broadcasters. It does permit stations to be fairly charged for music that they actually use.
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Please, join us in our fight against this unjust system. End this discrimination against religious stations. Religious radio is a dynamic medium where thousands of listeners reconnect every day with God. Religious radio is a powerful voice promoting individual dignity, family unity and brotherly love. We need to ensure that religious radio remains strong and vital.
Please, give us your support today. Left unchecked, the present music licensing system will continue to financially weaken many stations and many markets throughout America. Support the Turmond-Sensenbrenner music license bill immediately.
|Donald E. Wildmon,|
Hon. HANK BROWN,
DEAR SENATOR BROWN: On behalf of Focus on the Family and the hundreds of religious broadcasting facilities that carry our programming: many, many thanks! We appreciate everything you are doing to oppose the unfair treatment to which religious radio stations are currently subjected by ASCAP and BMI, the government-approved music licensing monopolies. Your support and understanding of the situation these broadcasters are facing means more to us than you realize!
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Please don't give up the fight! We want to encourage you to stand firm in your efforts to block the passage of the Copyright Term Extension Act, S. 483 and H.R. 989, and to reform the music licensing laws so as to include allowances for a fair per program license and access to repertoire information. As you and I both know, few if any of our stations devote large portions of their air-time to music, and what music they do play is normally of a very specific and narrowly defined genre. There is no reason in the world why they should be required to purchase expensive ''blanket'' music licenses.
Again, we are behind you one hundred percent in your campaign to reform the licensing laws, and we stand ready to help in any way we can. Keep up the good work, and may God richly bless you!
|James C. Dobson, Ph.D.,|
DEAR MEMBER OF CONGRESS: I am respectfully asking for your help to end a music licensing system that creates a terrible hardship on small religious broadcasters like those the National Religious Broadcasters represents. I request that you cosponsor S. 28 and H.R. 789, the Fairness in Musical Licensing Act of 1997, bills that were recently introduces by Senator Strom Thurmond and Congressman Jim Sensenbrenner.
|National Religious Broadcasters,|
|Manassas, VA, May 30, 1997.|
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The Fairness in Musical Licensing Act of 1997, which has the support of many evangelical and religious organizations, would enact badly needed reforms to the current systems of licensing broadcast music. It would not affect the important right of music composers, producers, artists and publishers to be compensated for the use of their work by radio broadcasters.
Religious broadcasters, and other stations that also use little or no copyrighted music in their programs, have been fighting for years to reform the current music licensing systems administered by performing rights monopolies like ASCAP and BMI. Under this system, religious broadcasters are virtually forced to purchase expensive ''blanket'' music licenses despite the fact that they use very little copyrighted music. Religious broadcasters are perfectly willing to pay for any copyrighted music they use on-air, and have been asking for years for the institution of a usable, economically viable ''per program'' license.
Despite these efforts, the performing rights societies have said, ''no,'' and have fought hard against any reform of the present licensing system which gives them extraordinary, monopolistic control of the music market.
We ask you to join us in our fight against this system, which discriminates against religious stations. Without meaningful reform, the present music licensing system will create financial hardship for many Christian stations across America. Please join us today in this historic fight. Please support the Thurmond-Sensenbrenner music license bill.
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|E. Brandt Gustavson,|
Mr. COBLE. Just for the record Mr. Hallemeier, I didn't introduce the gentleman to your left for the record.
Mr. JOSEPH. Mr. Chairman, my name is Bruce Joseph with the law firm of Wiley, Rein & Fielding. I am counsel to the NRB Music License Committee, and I am simply sitting here to advise my client.
Mr. COBLE. Good to have you with us, Bruce.
Who wants to go next? Mr. Hallemeier.
STATEMENT OF DIRK HALLEMEIER, PARTNER, RADIO PROPERTY VENTURES, AND VICE CHAIRMAN, NATIONAL RELIGIOUS BROADCASTERS MUSIC LICENSE COMMITTEE
Mr. HALLEMEIER. Mr. Chairman, my name is Dirk Hallemeier. I am a partner with Radio Property Ventures, which operates three religious format radio stations. Thank you for inviting me to testify at this hearing. I hope my testimony will describe some of the frustrations faced by a broadcaster in dealing with radio music license issues. The music licensing system in this country is broken. It perpetuates inequity and unfair practices by the performance rights organizations.
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The radio stations owned by my company, KXEG in Phoenix, KXEN in St. Louis, and KQXI in Denver, are all AM radio stations. They are largely Christian talk formatted, with programming consisting of syndicated teaching, live church services and local and network talk programs. Music is used very differently on these stations than on general market all-music stations. Feature music, where the audience's attention is focused on the music, makes up a very small part of our programming. Further unlike a contemporary music radio station, which plays 11 or more cuts an hour, when we do air feature music, it is typically a small part of the program interspersed with teaching and devotional talks or at the beginning of a live church service. When feature music is present in our programs, there are usually just a few songs played per hour.
Until very recently we had used ASCAP's blanket license. Even though our stations are known in their communities as talk stations, the ASCAP per program license was priced out of our reach. ASCAP's per program rate is roughly three times the blanket rate. Also, ASCAP charges for a full hour, or a full program if shorter than an hour, even if only one ASCAP song is featured during that hour or program.
In contrast, we have been able to use the BMI per program license for several years. The fee rate is just as bad and we are still greatly overcharged, but BMI defines a program period as 15 minutes. This offers a better approximation of the music used. For example, if only one quarter hour of a 1-hour program contains BMI music, we pay a fee based on the revenue from one quarter hour instead of paying for a full hour as we would with ASCAP.
Last September we placed our stations on ASCAP's new per program license. In order to make this economically worthwhile, however, we had to reduce the number of programs containing feature music to a bare minimum. Since we generate almost no revenue from music programs, we canceled those programs. Here are the results of that effort in 1996. On KXEG we used ASCAP feature music in just 28 percent of our program hours, yet we had to pay ASCAP a full 65 percent of what we would have paid under the blanket license. KXEN used ASCAP feature music in just 10 percent of its programs, yet paid 41 percent of the blanket license. KQXI used ASCAP feature music in only 1 percent of its programs during the period, yet we had to pay ASCAP 17 percent of the blanket license fee.
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The irony here is that all these stations use the new ASCAP per program license, which ASCAP says is a great improvement. In fact, when combined with the cost and hassle of logging music 24 hours a day, 7 days a week, and compiling monthly reports to ASCAP, the savings incurred are almost nil, and certainly not worthy of being called a fair alternative to a blanket license.
On the BMI side, KXEG featured BMI music in 1.5 percent of its programs, yet paid 10 percent of the blanket license fee. KXEN used BMI in only 9 percent of its programs, yet paid 32 percent of the blanket license. KQXI used BMI music in just 6.5 percent of its programs, but paid 34 percent of the blanket license. These are under the older interim license fees. BMI's current per program license will cost us more.
The fact that I paid less under the per program license is not the question. My concern is that the fees paid bore no proportionality to usage. If an all-music station playing ASCAP or BMI feature music in 90 to 100 percent of its programs pays 100 percent of the blanket fee, why should a station which features ASCAP or BMI music in fewer than 6.5 percent of its programs have to pay 34 percent of the blanket license?
Keep in mind that the all-music station is ratings driven and reaps high commercial rewards from the feature music it plays. Our stations, being talk and teaching program driven, derive no ratings and thus receive little direct benefit from playing feature ASCAP or BMI music.
Mr. Chairman, last year our committee went to rate court against ASCAP. This was the culmination of over 10 years of work, negotiating, organizing and fundraising by a group of several hundred stations. Still this trial, the first of its kind in radio history, nearly bankrupted the committee. How then would it be possible for single stations or even small groups of Hispanic or other emerging niche format stations to hope to navigate in such impossible terrain?
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As I said in my opening remarks, the system is broken and Congress must step in and fix it. The rules governing ASCAP and BMI must be clarified and updated for the 1990's and beyond. The relationship between blanket and per program licenses needs to be codified so that it does not require costly and repeated litigation.
Thank you for your attention to these important matters.
[The prepared statement of Mr. Hallemeier follows:]
PREPARED STATEMENT OF DIRK HALLEMEIER, PARTNER, RADIO PROPERTY VENTURES, AND VICE CHAIRMAN, NATIONAL RELIGIOUS BROADCASTERS MUSIC LICENSE COMMITTEE
Mr. Chairman. My name is Dirk Hallemeier. I am a Partner with Radio Property Ventures, which operates three religious-format radio stations. I am also the Vice Chairman of the National Religious Broadcasters Music License Committee (NRBMLC), which represents approximately 700 specialty-format radio stations in music licensing negotiations and proceedings. The common denominator among most of the NRBMLC-represented stations is that they use limited amounts of copyrighted music in their broadcast day.
I want to thank you for inviting me to testify at this hearing. I hope that my testimony will clarify for Congress some of the frustrations faced by a broadcaster in dealing with radio music licensing issues, primarily ASCAP and BMI-related, on an almost daily basis. The fact that I am here today, taking time out from my job of running radio stations, and the fact that my company has been helping fight this battle for music licensing fairness for more than a decade, attests to the reality of the problem. It is not just a dollars and cents problem, although that, of course, is part of it. The music licensing system in this country is broken, and it perpetuates unreasonableness and unfair practices on the part of the performance rights organizations (PROs).
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The radio stations owned by my company, KXEG in Phoenix, KXEN in St. Louis and KQXI in Denver are all AM radio stations. They are largely Christian talk formatted, with programming consisting of syndicated teaching, live church services and local and network talk programs. Music is used very differently on these stations in comparison to general market all-music stations. Most of our music is considered incidental, or background in nature, occurring mainly in themes, intros and commercial jingles. Feature music, wherein the audience's attention is focused on the music being played, makes up a very small part of our programming. Further, unlike a contemporary music radio station which plays 11 or more cuts an hour, when we do air feature music on our stations, it is typically a small part of the program, interspersed with teaching and devotional talks or at the beginning of live church services. When feature music is present in our programs, there are usually just a few songs played per hour. Music programs which play more than about 4 songs per hour are offered during weekends or at night on KXEG only.
Until very recently, our radio stations were blanket-licensed under ASCAP. Even though the stations are known in their communities as talk stations, the ASCAP per program license was priced out of their reach. This per program license was not economically feasible for our stations, largely due to the fact that the ASCAP per program fee rate has been set at roughly 300% of the blanket license fee rate. Additionally, under its per program license ASCAP requires a fee to be paid for a full hour (or a full program, if shorter than an hour), even if only one ASCAP song is aired during that hour or program.
In contrast, our stations have been using the BMI per program license for several years. Not that the BMI per program fee rate is any better than ASCAP s. Were it not for the fact that BMI defines a program period as 15 minutes, which in its cost implications can be less taxing for our type of programming than is ASCAP's one hour program definition, we would have been unable to use BMI's per program licenses. For example, if only one quarter hour of a half-hour or one hour program contains BMI music, you pay a fee based on the revenue from one quarter hour, instead of paying for the full half-hour or hour as you would with ASCAP. Even though the BMI per program fee rate remains far too high, the shorter program period makes the BMI per program license somewhat more accessible to our stations than ASCAP s.
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Last September, we placed our stations on the ASCAP per program license. In order to make this economically worth-while, however, we had to reduce the number of programs containing feature music to a bare minimum. Since music originated on our stations was deemed to be non-productive in revenue generation, we canceled all music programming over which we had control.(see footnote 2) Here are the results of that effort based on the final four months of 1996: On KXEG we used ASCAP feature music, or non-incidental music, in 28% of the programs, and we paid ASCAP under the per program 65% of what we would have paid under the blanket license. KXEN used ASCAP feature music in 10% of its programs, but paid 41% of what it would have paid under the blanket. KQXI used ASCAP feature music in 1% of its programs during the period, but ended up paying ASCAP 17% of the blanket license fee.
The irony here is that all of these stations paid fees in 1996 under the so-called Harris ASCAP per program license, which has been touted widely by ASCAP as greatly improved over their previous per program license. They have said it is particularly beneficial for stations that use ASCAP feature music in more than 10% of their programs. KXEG certainly falls into that category with 28% of its programs containing feature music, yet KXEG still paid ASCAP 65% of the blanket fee. Although we recognize that this represents a slight improvement over what would have been paid under the previous ASCAP ''Group W'' license, when combined with the hassle of logging music 24 hours a day, 7 days a week, and compiling tedious monthly reports to ASCAP, the savings incurred are almost nil, and certainly not worthy of being called a fair alternative to the blanket license for a station that uses so little music compared to the other radio stations in the industry.
Page 167 PREV PAGE TOP OF DOC On the BMI side, KXEG used BMI music in 1.5% of its programs, yet paid 10% of the blanket; KXEN used 9% BMI music, yet paid 32% of the blanket fee; KQXI used 6.5% BMI music and paid 34% of the blanket license.
The fact that I paid less under the per program license than I would have under the blanket license of ASCAP or BMI is not in question. My concern is that the fees paid bore no proportionality to usage. If an all-music station playing ASCAP or BMI feature music in 90100% of its programs pays 100% of the blanket fee, why should a station which features ASCAP or BMI music in fewer than 6.5% of its programs have to pay 34% of the blanket license? Keep in mind that the all-music station is ratings-driven and reaps high commercial rewards from the feature music it plays. Our stations, being talk and teaching program-driven, derive no ratings and thus cannot benefit commercially from playing feature ASCAP or BMI music.
REPERTOIRE ACCESS REMAINS ILLUSORY
When a seller charges its customer for products or services rendered, it is understandable that the customer would demand to know what he is paying for. ASCAP and BMI never have given their customers this option, even though we as a committee have begged them to do so for better than a decade. In spite of their efforts to convince Congress that they now offer their respective repertoires on the Internet, ASCAP and BMI remain seriously deficient. This fact is borne out in research that has been conducted under the auspices of the Committee as recently as May, 1997. A survey was conducted to determine the completeness and user viability of ASCAP's ACE and BMI's Hyper Repertoire website databases. In the first set of tests, the researcher compared Billboard Magazine's April 26, 1997 Hot 100 Singles against both databases. He also compared lists of 40 ASCAP songs and 40 BMI songs, previously confirmed in writing by the PROs, against their respective databases.
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The Billboard tests confirmed that these sites were far from complete in disclosing all of the current ''hits'' from the magazine charts that are attributable to them. The Billboard chart stated that 69 of the 100 song titles were licensed by ASCAP. Yet, only 22 of the 69 could be found in the ASCAP ACE database, giving an accuracy level of 32 percent. The same ''Hot 100 Singles'' chart, when measured against BMI's Hyper-Repertoire, showed that of the 60 titles said to be licensed by BMI (33 of which were said to be jointly licensed with ASCAP), only 40 could be found. This gives BMI's site a higher accuracy rating than ASCAP's at 66 percent, yet demonstrates a serious lack of completion.
A second test was conducted using older religious title ''standards'' from the playlists of the Committee's radio stations. 40 titles from these lists, which had been previously confirmed as licensed by either ASCAP or BMI via written lists sent in to their indexing departments, were compared against each of the sites. Of the 40 titles ASCAP had confirmed in writing, 35 showed up on ACE. Five were not identified. With BMI, 31 of the 40 confirmed titles were present on BMI's Hyper Repertoire. Nine, or almost 25 percent, were not identified. In this instance, the titles screened were first the product of the PROs' own indexing departments, but still remain inconsistent with what is shown at their sites!
Perhaps the most telling discovery of this research is that both sites still lead in with disclaimers as to the accuracy of their repertoires on the Internet. Among other things, each disclaimer warns the inquirer that the PRO ''makes no representations with respect to its accuracy,'' and ''disclaims any . . . liability for any loss . . . as a result of the use of the information in this data base.'' As you can see from the results of the research, any station trying to rely on the database would have been at risk of being sued for copyright infringement.
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This research shows that ASCAP and BMI do not provide a basic service to their customers, and their lack of complete disclosure places their per program licensees at a serious disadvantage. If those who would prefer a per program license cannot know what titles they are paying for under a per program license, they cannot make meaningful decisions about music use. Per program stations and the syndicators they work with cannot choose, for instance, to program and pay for only ASCAP music in one program and BMI or SESAC in the nextand I suspect that is just the kind of choice the PROs fear most. If ASCAP and BMI have gone to all the time and trouble to launch their sites and place portions of their repertoire on them, why don't they place their full catalogues up there? Congress must provide an economic incentive for them to do so.
H.R. 789 and S.28, The Fairness in Musical Licensing Act, provides such incentive. Under the bill's Section 2(b) ''Access to Licensing Information and Repertoire'' provisions, if a PRO does not have a song title in its site, it cannot sue for infringement of that work, nor can it charge a per program customer for its usage. We suspect that such a feature would be all the economic incentive needed to encourage the completion of this valuable service. Without it, their Internet repertoire sites will remain largely what they seem to have been created for: window dressing to placate certain critics.
THE PLAYING FIELD MUST BE LEVELLED
Last year our committee went to Rate Court against ASCAP. This was the culmination of over ten years of worknegotiating, organizing, fund-raising by a group of several hundred stations who had an organizational structure with an Executive Director. Still, this trial, the first of its kind in radio history, nearly bankrupted our Committee.
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How then, could it be possible for single stations, or even groups of Hispanic or other emerging ethnic niche format stations, to hope to navigate in such an impossible terrain?
As I said in my opening remarks, the system is broken and Congress must step in and fix it. The ASCAP and BMI Consent Decrees must be clarified and updated for the 90s and beyond. The appropriate relationship between blanket and per program license fee rates needs to be codified so that it does not take major litigation to answer that question. It should be fixed as a matter of law, and H.R.789/S.28 would do just that.
We thank the Subcommittee for its attention to these important matters. My colleagues and I would be happy to assist the Subcommittee in any way that we are able.
Mr. COBLE. Thank you, Mr. Hallemeier.
Let the record show that seated next to Mr. Sterling to his left is Mr. Fred Koenigsberg, counsel for ASCAP.
STATEMENT OF ROBERT STERLING, PRESIDENT, COALITION FOR THE PROTECTION OF AMERICA'S GOSPEL MUSIC HERITAGE, ACCOMPANIED BY I. FRED KOENIGSBERG, COUNSEL FOR ASCAP
Page 171 PREV PAGE TOP OF DOC Mr. STERLING. Thank you, Mr. Chairman. On behalf of the Coalition for the Protection of America's Gospel Music Heritage, we appreciate the opportunity to present our views today on H.R. 789.
We trust that when you return to your colleagues in Washington that you will take back with you a two-part message from those of us here in Nashville. The first part of that message is that H.R. 789, if passed, will savage the commercial incentives for the creation of quality religious music. Second, H.R. 789, if passed, will increase the profits of wealthy commercial radio station owners at the expense of the songwriters who write the songs the station owners play.
The Coalition for the Protection of America's Gospel Music Heritage is a broad alliance made up of church music publishers, Christian trade professionals, Christian songwriters, the administrators of gospel music, Christian recording artists and pastors. We have a common bond, and that is that religious music permeates every aspect of our lives. We have a common goal here today, and that is to oppose legislation, such as H.R. 789, that threatens to harm the environment for Christian music.
Ours is indeed an ironic situation, perhaps illustrated best by a paraphrase of Charles Dickens: It is the best of times, it is the worst of times. Christian music is gaining unprecedented widespread acceptance around the world. It is the fastest growing music in terms of popularity in the United States, and we are finally, those of us who create and perform Christian music, finally beginning to receive popular recognition for our talents out in the rest of the world, and yet at the same time we are being attacked by a small group of influential people who benefit enormously from our gifts, who are trying to reduce our well-deserved and relatively modest economic return.
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I ask what is the real issue here? The issue is not as the NRB has portrayed it between the NRB, ASCAP, BMI and SESAC. The performing rights organizations are strawmen, they are scarecrows out there to help us. The issue is indeed between the NRB and the creators and publishers of Christian music. It is the thousands of songwriters and our publishers who will pay the price for this legislation. Beyond that, it will be the recording artists who will no longer have good songs to record; beyond that the music teachers who teach our music, the church and school choirs who sing our music, instrument manufacturers whom we shop with, tape duplicators, music retailers and on and on and on.
The issue is not as the NRB has portrayed the policies of our representatives. This is a property rights issue, plain and simple. It is the property of the Christian writers, which the NRB wishes the Congress to hand to them on a silver platter like manna from Washington. Orrin Hatch said it best when he said, ''You get the impression that they just don't want to pay royalties.'' Regardless of their rhetoric, the fact is every penny the station owners save in licensing fees comes out of the pockets of the writers and publishers whose songs generate profits for their stations. Christian music licensing fees do not support secular musicians nor vice versa, unfortunately.
The issue is not a lack of choice on the part of the NRB. The NRB can choose to license from three competing performing rights organizations. Whereas in Europe they have one with a blanket license only, in America there are three performing rights organizations and they offer a blanket license and the per program license. The NRB can choose to negotiate directly with an individual composer or a lyricist. The NRB can choose to broadcast music in the public domain. The NRB can choose to create or commission their own music if they wish, and the NRB can, as they have admitted is happening right now, seek relief from a Federal rate court. It is currently doing that, and the decision is expected from the judge at the end of the summer.
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The NRB has contended that the current per program license does not offer genuine economic choice, and that is what we are talking about, economic choice from its alternative, the blanket license. In fact, a recent study of data from ASCAP shows the opposite to be true. While they claim the per program license is not a commercial alternative, the 341 commercial NRB stations with a religious format utilize the per program license 6 times more frequently than their non-NRB counterparts with similar formats, and the average savings enjoyed by those stations using the per program license over the blanket license is 68 percent. Despite the savings of 68 percent, which is a viable economic alternative, they want Congress to fix the price even lower, and that is, plainly speaking, what this legislation is, arbitrary price fixing.
We in the coalition flatly reject the notion that Congress should legislate a formula for payment for the use of our property. This is not ASCAP's property. This is my property. Let alone a formula that substantially reduces our income and all this based on arguments from the NRB that are frankly nothing more than smoke and mirrors.
Further, we ask that Congress recognize the commercial and spiritual work of a group of small businesspeople, Christian songwriters and lyricists and their publishers, and to acknowledge the genuine value of their work. Finally, we ask that Congress continue to recognize the genius and the intrinsic value of the American copyright system and act to protect it now from those groups who are attacking it for selfish gain. The system we have, gentlemen, works. Let's allow it to do so.
Thank you so much.
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[The prepared statement of Mr. Sterling follows:]
PREPARED STATEMENT OF ROBERT STERLING, THE COALITION FOR THE PROTECTION OF AMERICA'S GOSPEL MUSIC HERITAGE
Mr. Chairman, Thank you for the opportunity to present the views of The Coalition for the Protection of America's Gospel Music Heritage on H.R. 789. I hope this testimony will inspire you to take back a two-part message to your colleagues in Washington who care about the values inherent in Christian Music: First, H.R. 789 will savage the commercial incentives for the creation of religious music, and second, it will increase the profits of wealthy commercial radio station owners at the expense of the Christian music songwriters who write the works the station owners play.
THE COALITION FOR THE PROTECTION OF AMERICA'S GOSPEL MUSIC HERITAGE
The Coalition for the Protection of America's Gospel Music Heritage is a broad alliance of American organizations and citizens for whom Christian music is both an effort to make a living and a way of life. In fact, for most of our members Christian music touches every aspect of our physical and spiritual lives. So, in a very profound way, we are all bound together by the desire to preserve the incentives to create religious music.
We have banded together to oppose legislative proposals that will harm the environment for Christian music. Ironically, this diabolical threat to the income potential of Christian music comes at the very time when there has been a sudden spontaneous popular acceptance of it in new markets. Recently, we have seen this music take-off and cross-over into new audiences in stunning and unpredictable leaps. Christian music is now the fastest growing music in popularity in the United States. It is the sixth largest selling category of music overall with a market increase of 38% in 1996.
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Now, when Christian songwriters are finally receiving some popular recognition of our talent, some of those who receive enormous financial benefit from our gifts are trying to reduce our well-deserved and relatively modest economic returns.
RELIGIOUS SONGWRITERS, NOT OUR REPRESENTATIVES, ARE AT ISSUE
The owners of those commercial stations which use our music, (through their trade association the NRB) have tried to portray this issue as a dispute between the performing right societies, ASCAP, BMI, and SESAC, and themselves. But this is not the situation. The true focus is not on the policies of our representatives, but on the property of the writers of religious music which the NRB wants the government to hand to them like manna from Washington.
No matter how they try to disguise the truth, every penny which these commercial station owners ''save'' in fees to ASCAP or BMI comes out of the pockets of the Christian songwriters whose work generates profits for their stations.
In essence, while Christian music is being used to benefit business enterprises, like these radio stations that generate millions in profits, the Christian music songwriters are being told that the government should decree that their property must be given away for little or nothing.
The radio station owners who are the proponents of H.R. 789 and S. 28 repeatedly claim that their fight is not against the Christian songwriters, but rather against our representatives which license our copyrighted property: ASCAP, BMI, and SESAC. They disparage our representatives by calling them ''monopolies''; the facts are otherwise:
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First, true monopoly grants the user no choice of products. Yet these radio station owners have numerous choicesto accept blanket or per program licenses which the societies have negotiated with the radio industry, to avoid dealing with the societies at all and arrange individual contracts with individual composers, to commission their own music, to use public domain music, or to have the Federal Court set a reasonable license fee. In fact, the NRB currently has a case before a federal court seeking such relief, and I am told a decision is expected soon.
Second, these commercial music users ignore the extent to which they benefit from our societies. Music users are able to obtain a license to use our music in the most convenient and efficient manner, with the least administrative complexity, through the current system of licensing. The performing rights societies provide an extremely valuable clearinghouse service to these radio station owners.
Finally, the real parties-in-interest here are not the three performing right societies. I, and all my brothers and sisters who create and publish music, are the real parties-in-interestthe hundreds of thousands of songwriters, music publishers, recording artists and their allied colleagues such as music teachers, church and school choirs, instrument manufacturers, commercial music outlet owners and their employees, all of whom make their livings from the payment for dissemination of creative musical property.
CHRISTIAN MUSIC STUDY
Our desire to preserve the incentives for Christian music has prompted us to make a study of the facts regarding the license fees for Christian music on radio stations and the financial situation of the commercial religious-format station owners. While our data is not exhaustive, we are confident that it is an accurate portrayal of key facts and comparisons from which the Subcommittee can draw relevant conclusions regarding the lack of need for Congressional price-setting legislation in this area.
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The study, which is appended to this statement, leads to these two simple and significant conclusions:
The commercial NRB member stations use the current per program license offered by the performing right societies six times more frequently than non-NRB commercial stations with similar formats;
The National NRB stations which use the per program license save an average of 68% over the cost of the blanket license.
In other words, although the NRB has consistently claimed that the per program license is not a real commercial alternative, its own members use it far more than their counterparts in the radio industry as a whole. And despite an average of almost 70 per cent savings, they want legislation to fix music prices even lower!
Look at the latest Christian music cross-over successesa new Gospel Album, ''God's Property From Kirk Franklin's NU Nation,'' by the Dallas choir that has moved to number 3 on the pop charts. Or the phenomenal success of Bob Carlisle's ''Butterfly Kisses'' which has recently soared to number one in pop sales. These are marvelous examples of the growing acceptance of Christian music. However, in spite of the unprecedented airplay songs of worship now receive, we are forced to fight this pernicious legislation whose proponents would make Christian music played on Christian stations less valuable than Christian music played on secular stations! This is nothing short of astonishing; while the NRB is falsely claiming that their licensing fees subsidize music which they find offensive, they are maneuvering in court and in Congress to pay less for the music representing the spiritual values for which they say they stand!
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LEGISLATING THE PRICES FOR RELIGIOUS MUSIC
This legislation is nothing more than an arbitrary price-fixing proposition. We flatly reject the notion that Congress should legislate any formula for payment for the use of our property, let alone one which is designed to substantially reduce our incomes. Regrettably, some Members of Congress seem to be supporting the spurious arguments of those who are seeking to devalue Christian music in this legislation. We are mystified by those who would adopt these specious arguments at face value.
Yes, music is free for those who use it during worship in their Churches, and we adamantly agree that it always should be so. But can that be a valid pretext to give religious music for free to speculators who routinely trade in commercial broadcasting properties? Should Congress legislate lower incomes for our members from radio programs, no matter how much station owners may profit from using our members' creative musical property, no matter how much commercial advertising is carried over those broadcasts, and no matter how much money the stations may charge for carrying the religious broadcasts which use our music? We fervently hope not.
OTHER COPYRIGHT ISSUES
Mr. Chairman, although the bulk of my statement has dealt with H.R.789 as it would affect those who create our Christian music, I would be remiss if I did not comment on other important music issues.
First, we view H.R.789 in its entirety as a major assault on the enormously successful creativity of America's songwriters. While Christian music has risen in popularity, American music as a whole is the most popular music in the world. It boggles the mind to try to consider why Congress would punish the creators of American music with a bill like H.R.789, whose sole objective is to take the property of America's music creators and give it away for free to those who would profit from it. H.R.789 was conceived in the greed of those who have refused to negotiate in the free market for the use of the property of America's songwriters. This Congress should not interject itself into this commercial dispute, but should insist that the recalcitrant parties go to the bargaining table and reach commercial agreements with the various music licensing organizations just as so many other organizations have done.
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Also, Mr. Chairman, I wish to associate myself strongly with the statements made here today by those who support the effort to correct the disastrous La Cienega decision, and those who support the extension of the term of copyright protection to make it equal to that of the European Union. The idea that the enormously valuable musical property of so many hard-working American songwriters whose works were placed on records prior to 1978 would suddenly become valueless is a travesty. How many of us would be outraged if we learned that the houses we owned were suddenly taken away from us as a result of an interpretation of an old law that ran counter to the legal procedures which we were assured were proper (by our government no less) and we faithfully followed? All of us, I am sure. That is exactly the situation that has occurred on La Cienega. Mr. Chairman, I thank you for introducing legislation to correct this inequity.
And, Mr. Chairman, with regard to the extension of the term of copyright protection, it only makes common sense for us to continue the enormous benefits of America's lead in the field of copyright by extending our term of protection to that of the European Union. Our copyrighted works are so much more popular in Europe than theirs are here, that it would be the equivalent of shooting ourselves in the foot not to take advantage of the extra 20 years of protection Americans would receive in Europe. Let us continue to take advantage of our great trade lead by enacting copyright term extension legislation. I thank and commend Congressman Bono for his leadership in this matter.
We ask Congress to recognize the commercial and spiritual worth of a group of small business people, Christian composers and lyricists, and to acknowledge the genuine value of their work. Please recognize the genius and intrinsic value of the American music copyright system as it applies to the Christian music community, and act to protect it from those groups who are attacking it for their selfish financial gain.
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CHRISTIAN MUSIC AND THE MUSIC INDUSTRY
''Christian music'' is a broad genre encompassing music written to convey particular Christian values and themes. The popularity of Christian music is rising dramatically. Christian music is now the sixth largest selling category of pre-recorded music. Christian music increased its United States market share by 38% in 1996, making it our nation's fastest-growing type of music.
THE CHRISTIAN MUSIC COMMERCIAL RADIO FORMAT
Nine hundred and thirty-two commercial radio stations in the United States format Christian music to reach listeners and turn a profit for their owners. This religious format ranks fourth among the country's radio stations.
RADIO BROADCASTERS TRADE ASSOCIATIONS AND CHRISTIAN MUSIC
Two organizations represent the owners of religious format radio stations in dealing with the songwriters of the copyrighted music they use to turn a profit:
The smaller of the two, the National Religious Broadcasters Association (NRB), represents 341 of the commercially operated religious-format stations.
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The larger, the Radio Music License Committee (RMLC), represents 591 (as part of a much larger group).
The RMLC negotiated an agreement with ASCAP, but the NRB has refused. The RMLC reached an agreement with ASCAP for the 5-year term commencing January 1, 1996. Those licenses were found by the United States District Court which oversees the ASCAP consent decree to be ''fair and non-discriminatory.'' The NRB, however, claims that its stations are somehow different from all of those which have accepted the RMLC forms of license.
DESPITE PROTESTATIONS, NRB STATIONS CHOOSE THE ASCAP PER PROGRAM LICENSE FAR MORE THAN RMLC RELIGIOUS FORMAT STATIONS
21.7% (74 of 341) of NRB commercially owned religious format stations have chosen the per program license. Only 3.5% (21 of 591) RMLC commercially owned religious format stations have chosen the per program license. This is a better than 6 to 1 ratio over identically formatted stations represented by the RMLC.
NRB STATIONS HAVE SAVED 68% OVER THE BLANKET LICENSE FOR PER PROGRAM.
53 of the 75 NRB stations which chose the per program license submitted financial data to ASCAP. Their own data shows:
Adjusted gross revenues totalled $54,059,470.
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Per program license fees to ASCAP totalled $281,033.
Blanket license fees to ASCAP would have totalled $873,060.
Total savings on ASCAP licensing fees were $592,027.
The per program fee represents one half of 1% of the gross revenues for the use of ASCAP music.
The average savings over the blanket license was 68%!!
Contrary to the NRB's assertions that the per program licenses do not offer genuine savings, their savings are huge!
GROWING POPULARITY OF PER PROGRAM LICENSES
Since 1985, the number of radio stations choosing ASCAP per program licenses has risen by over 550%, from 183 to 1013.
THE NRB WOULD PUNISH CHRISTIAN SONGWRITERS
Almost no writers of Christian music are able to support themselves and their families on their performance royalties. Yet the NRB is trying to reduce the income of these Christian music writers ever further. The head of the Coalition to Preserve Our Gospel Music Heritage, Robert Sterling, characterizes the NRB position as misguided at best: ''The problem is the broadcasters want Congress to believe the performing right organizations are the enemy. They do not want Congress to understand that the performing right organizations do indispensable work for songwriters and publishers: they collect the money to which we are entitled. No songwriter could do that on his or her own.'' Sterling concluded, ''We ask Congress to understand that. . . . The attack on the performing right organizations is in reality a direct attack on individual songwriters and their ability to earn a living and support their families.''
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CHRISTIAN MUSIC AND THE MUSIC INDUSTRY
''Christian music'' is a broad genre encompassing music written to convey particular Christian values and themes. Christian music is written in a wide variety of styles including Black Gospel, Southern Gospel, Contemporary/Pop, Inspirational, Positive Country, Alternative/Rock and Rap. Christian music is today characterized within the music industry for its growing market share, fan loyalty, diversity and laudable positive values. According to figures released in March 1997 by the record industry's leading trade group, the Recording Industry Association of America, Christian music is now the sixth largest selling category of pre-recorded music, behind rock, country, urban contemporary, pop and rap. Its sales surpass classical, jazz and other formats. According to RIAA sales figures Christian music increased its United States market share by 38% in 1996, making it our nation's fastest-growing type of music.(see footnote 3)
Christian music artists like Amy Grant, Jars of Clay, Point of Grace, Kirk Franklin and the Family, dc Talk, Twila Paris, Michael W. Smith and Steven Curtis Chapman have achieved a level of fame that was formerly reserved for pop music stars, some reaching sales in the millions. It is no longer unusual for video clips by Christian artists to be shown on such generally secular outlets as MTV and VH1. Christian music record labels are viewed as sound investments by the major mainstream record companies such as Warner Bros., EMI and Zomba.
THE CHRISTIAN MUSIC COMMERCIAL RADIO FORMAT
Nine hundred and thirty two commercial radio stations in the United States format Christian music to reach listeners and turn a profit for their owners.(see footnote 4)
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This religious format ranks fourth among the country's radio stations. Indeed, religious music is one of the principle reasons why some 20 million people tune into these commercial radio stations. In a typical comment, one listener said the music ''feeds my spirit. It's kind of like putting fuel on a fire when it's dying. You have to stoke it up. And this music does that.''(see footnote 5) Professor Stephen Wizenburg of Grand View College in DesMoines, Iowa, who has studied such stations since 1980, states that religious format programmers ''are shifting to meet the demands of a younger audience. That's where the money is, and that's where the ministry is. They are going after the young to middle-aged Christian who has money, lives a contemporary lifestyle yet doesn't want to hear heavy rock music on the secular stations.''(see footnote 6)
The latest example of the popular appeal of Christian music is the unprecedented success of ''God's Property From Kirk Franklin's NU Nation,'' a gospel album which opened at #3 on Billboard magazine's pop charts, a feat never before achieved by a Christian album. The album also reached #1 on both the R&B and gospel charts, and, with 120,000 albums sold within one week of its release, tripled the sales of Michael Jackson's newest album, released one week before. Previously, Christian artist Kirk Franklin's first two albums went platinum, while his recent Christmas album went gold, an unheard-of level of success for a Christian musician.
RADIO BROADCASTERS TRADE ASSOCIATIONS AND CHRISTIAN MUSIC
Two organizations represent the owners of religious format radio stations in dealing with the songwriters of the copyrighted music they use to turn a profit. The smaller of the two, the National Religious Broadcasters Association (NRB), represents 341 of the commercially-operated religious-format stations. The larger, the Radio Music License Committee (RMLC), represents 591 (as part of a much larger group).
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The RMLC came to an agreement with ASCAP for a 5-year term commencing January 1, 1996, on two different types of licenses which are available to all stations. They are: (1) the blanket license, intended for the average station (of whatever format) which uses ASCAP music as a mainstay of its programming (in about 55% or more of its programming), under which fees are paid based on a percentage of all revenues, and (2) the per program license, designed for stations which use ASCAP feature music in about 55% or less of their programming, under which fees are largely paid based on a percentage of only the revenues from that programming. Those licenses were found by the United States District Court which oversees the ASCAP consent decree to be ''fair and non-discriminatory.'' Over 9,000 radio stations of all types are now licensed under one of those agreements, as they choose.
The NRB, however, claims that its stations are somehow different from all of those which have accepted the RMLC forms of license. The NRB chose to litigate with ASCAP over licenses for the period through December 31, 1995 and a decision is expected from the court imminently.
In both this litigation and its legislative efforts, the NRB is seeking to reduce the income of Christian music songwriterswhose product and property, the songs they write, are a significant element in the success and profitability of their broadcasting operationsby radically changing the way copyright owners are compensated for the performances of Christian music. At the very time when Christian music is showing itself to be one of the fastest growing music genres, the NRB wishes to reduce the financial rewards to those who have for so long labored in this field.
Page 186 PREV PAGE TOP OF DOCINCREASE IN RADIO STATIONS' SELECTION OF PER PROGRAM LICENSES
Despite the NRB's repeated criticism of the per program license, the number of radio stations opting for this form has increased dramatically. From January 1985 to June 1997, the increase in ASCAP per program licenses has been over 550%, from 183 to 1,013.
NRB STATIONS ARE REALIZING HUGE SAVINGS FROM THE CURRENT PER PROGRAM LICENSE
The essence of the NRB's claim is that its members are forced to take what it calls an ''expensive'' blanket license because they
say the per program alternative is too expensive. Nothing could be further from the truth. The facts demonstrate that NRB stations are realizing huge savings from the per program license.
NRB STATIONS CHOOSE THE ASCAP PER PROGRAM LICENSE FAR MORE THAN RMLC RELIGIOUS FORMAT STATIONS
21.7% (74 of 341) of NRB commercially-owned religious format stations, have chosen the per program license. Only 3.5% (21 of 591) RMLC commercially-owned religious format stations, have chosen the per program license.
The NRB stations, contrary to their protestations, are benefitting from the per program license or they would not be choosing it at better than a 6 to 1 ratio over identically formatted RMLC stations.
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NRB STATIONS HAVE SAVED 68% OVER THE BLANKET LICENSE FOR PER PROGRAM.
53 of the 74 NRB stations which chose the per program license submitted financial data to ASCAP. Their own data show:
Adjusted gross revenues totalled $54,059,470.
Per program license fees to ASCAP totalled $281,033.
Blanket license fees to ASCAP would have totalled $873,060.
Total savings on ASCAP licensing fees were $592,027.
The per program fee represents one half of 1% of the gross revenues for the use of ASCAP music.
THE AVERAGE SAVINGS OVER THE BLANKET LICENSE WAS 68%!
Contrary to the NRB's assertions that the per program licenses do not offer genuine savings, their savings are huge!
Page 188 PREV PAGE TOP OF DOCSTATE-BY-STATE EXAMPLES PROVE THE HUGE FINANCIAL THE BENEFITS OF THE PER PROGRAM LICENSE FOR NRB STATIONS
Arizona3 of 9 NRB stations chose the per program license; 1 of them reported financial data. Its savings were 88% over the blanket license. Of the 22 RMLC religious format stations, none chose the per program license.
California12 of 19 NRB stations chose the per program license. All 12 reported financial data. Their average savings were 78% over the blanket license. There were 11 RMLC religious format stations, and none chose the per program license.
Georgia1 of 12 NRB stations chose the per program license and reported financial data. It saved 55% over the blanket license. Only 1 of 45 RMLC religious format stations chose the per program license.
Illinois1 of 5 NRB stations chose the per program license and reported financial data. It saved 77% over the blanket license. 2 of 9 RMLC religious format stations chose the per program license.
Missouri3 of 8 NRB stations chose the per program license; 2 of them reported financial data. Their average savings were 77.5%. There were 15 RMLC religious format stations, and none chose the per program license.
Ohio3 of 9 NRB stations chose the per program license; 1 reported financial data. It saved 51% over the blanket license. Only one of 18 RMLC religious format stations chose the per program license.
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Pennsylvania4 of 12 NRB stations chose the per program license and reported financial data. Their average saving was 67% over the blanket license. Only 2 of 19 RMLC religious format stations chose the per program license.
Texas4 of 21 NRB format stations chose the per program license; 1 reported financial data. It saved 91% over the blanket license. Only 1 of 32 RMLC religious format stations chose the per program license.
South CarolinaNone or the 4 NRB stations chose the per program license. None of the 23 RMLC religious format stations chose the per program license.
Iowa1 of the 4 NRB stations chose the per program license; it did not report financial data. None of the 5 RMLC religious format stations chose the per program license.
NRB STATIONS COULD SAVE EVEN MORE UNDER THE NEW PER PROGRAM LICENSE
The facts set forth above are based on fees reported under the terms of expired ASCAP radio license agreements. The new per program agreement negotiated with the RMLC and approved by the Federal Court for the term beginning January 1, 1996, is more generous than the previous agreements. Thus, if anything, the impact of the new agreement makes the per program license an even more attractive alternative, especially for smaller stations.
The speciousness of the NRB's arguments is easily shown: The NRB has claimed that the record keeping required by the per program license is too burdensome. To make that record keeping easier, ASCAP developed a software package which it made available without charge. To date, 141 stations employ the software package. Yet, none of the 23 religious format stations using the per program license owned by Mr. Ed Atsinger, Chairman of the NRB's licensing committee, have opted to use the software package.
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THE NRB WOULD PUNISH CHRISTIAN SONGWRITERS
ASCAP takes the license fees paid by religious format stations and pays them to the creators and owners of the music those stations performnot to creators and copyright owners of other music. Hence the license fees paid by those stations are essential to Christian Songwriters. To Illustrate:
The Coalition to Preserve Our Gospel Music Heritage is headed by Robert Sterling, Nashville-based songwriter, producer and arranger. Sterling co-wrote the hit ''God is With Us'' recorded by the popular vocal group, Point of Grace. That song was released in 1995. It made 1 on the Christian Adult Contemporary chart and did very well on both the Inspirational chart and the Christian Hit chart. Nine out of ten Christian radio music stations played it in America in heavy rotation. The performing rights money he received for that major hit, collected on his behalf by ASCAP, was somewhere between $2,000 and $3,000. Sterling's experience is typical. Almost no writers of Christian music are able to support themselves and their families on their performance royalties. Yet the NRB is trying to reduce the income of these Christian music writers even further.
Sterling characterizes the NRB position as misguided at best: ''The problem is the broadcasters want Congress to believe the performing right organizations are the enemy. They do not want Congress to understand that the performing right organizations do indispensable work for songwriters and publishers: they collect the money to which we are entitled. No songwriter could do that on his or her own.'' Sterling concluded, ''We ask Congress to understand that the NRB and the National Restaurant Association are attacking straw men when they attack ASCAP and BMI. The result they seek is the reduction of their payments for music. Those payments are the livelihood of individual songwriters in all music genres. The attack on the performing right organizations is in reality a direct attack on individual songwriters and their ability to earn a living and support their families. This study shows just how false the accusations of the NRB are.''
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Attached is a chart showing the state-by-state break-down of all commercial stations, those with religious formats, those with such formats which belong to the NRB, the numbers which have taken ASCAP per program and blanket licenses, and the same information for non-NRB religious format stations.
INSERT OFFSET RING FOLIOS 32 TO 34 HERE
Mr. COBLE. The meeting will come to order. This has been a very well-behaved crowd, and I would appreciate your coming to order during the waning hours of this session.
Each of my colleagues has to catch a plane, so I will conclude the questioning in case they have to depart. The gentleman from Wisconsin.
Mr. SENSENBRENNER. Thank you very much.
Mr. Sterling, I don't think you have read my bill very carefully on what H.R. 789 proposes to do, but I am going to ask you a couple of questions, perhaps to try to find out what is driving you.
Do you think it is fair, Mr. Sterling, as Mr. Atsinger states, that ASCAP and BMI charge radio stations using per program licenses two to four times per song the amount that they charge stations using blanket licenses?
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Mr. STERLING. I think the logic that you are using behind this comparing the blanket license to the per program license is essentially flawed.
Mr. SENSENBRENNER. Mr. Atsinger, that is what is in the bill, so let's talk about what is in the bill. My question is, is it fair that the stations that use per program licenses pay two to five times more per song than the stations that use blanket licenses? Is it fair or isn't it?
Mr. STERLING. It is, Mr. Sensenbrenner. Actually, let's look at business everywhere else. I think the answer to that question is yes, it is fair. If we all hop in a car and go down to Shoney's right now, we are all hungry, it is getting late in the day, we can all get in line at the buffet and pay $7.99, OK? And it is all you can eat. A guy like me can put them out of business. Or we could sit down and order al a carte and you know what you would find out? You can order a cup of coffee, a sandwich, and you have spent $6. That is not proportional to an all-you-can-eat. You cannot compare the base rate, which is the bulk discount rate of a blanket license to an al a carte shopping off the menu approach that the NRB wishes to do. So yes, it is fair. [Applause.]
Mr. COBLE. Folks, I am going to ask you for the last time. We do not have the time for this and I ask you to maintain order or I will call the marshal in. Don't make my coffee taste bad this late in the day. The gentleman from Wisconsin.
Mr. SENSENBRENNER. My second question, Mr. Sterling, is, do the religious songwriters who are members of your organization get paid at a rate of two to five times more than other songwriters do?
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Mr. STERLING. No, we don't. That is because Christian radio pays so little already. It has nothing to do with a system that ASCAP has created. ASCAP takes the money that they collect from Christian radio, put it into a pool and spin that, put that back out, taking about 15 cents for each dollar that is collected.
Mr. SENSENBRENNER. Where does the difference go? You said they pay two to five times more but you don't get two to five times the payment. Where does the difference go?
Mr. STERLING. Excuse me, sir. Again you are comparing apples and oranges. The blanket license, this is just money that is coming in. You cannot say that they are paying two to five times more per unit. The per unit cost has nothing to do with it. It is moneys that are collected into a pool and paid out to us.
Mr. SENSENBRENNER. Mr. Sterling, the issue is whether the per unit cost is fairly stated. ASCAP and BMI had been found to violate the antitrust laws in 1950. That is when the consent decree was entered. There was a finding of a violation of the antitrust laws a long, long time ago and the consent decree is basically what BMI and ASCAP have been operating under. I am just wondering if you are really representing the folks that you claim to represent because the licensing societies are collecting that much more per play of religious tunes than all-music radio stations but your members aren't getting the money.
Mr. STERLING. No. You cannot say that pay per play or per tune. It doesn't wash that way. I can't help it that Christian radio stations are paying enormously less as a group. That is what is coming in, all that money that Christian radio stations pay into a pool. That money is being distributed to us.
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Mr. SENSENBRENNER. Do you think it is fair that if they play an ASCAP tune once during the hour, they have to pay ASCAP for the whole hour?
Mr. STERLING. Yes. Think about it. My father was a retailer. I learned something a long time ago. That when someone buys something in bulk, there is less hassle involved and you get a lower per unit price. When you buy something one time, you pay more for it. That is simply what is involved here.
Mr. SENSENBRENNER. What happens if you don't want to buy something in bulk?
Mr. STERLING. You pay the unit price. I paid $18,000 for my used Ford Explorer. If I were to try to rebuild that at an auto parts store, it would cost $200,000. I can't go down to the auto parts store and say, that air filter when I bought the car would have been about 63 cents. They are going to charge me $7 or $8 for it based on the number of parts in the car.
Mr. SENSENBRENNER. You said that ASCAP segregates out the money that it gets from religious broadcasters and pays the religious broadcasters out of that pool.
Mr. STERLING. Pays the songwriters.
Mr. SENSENBRENNER. Pays the songwriters. I stand corrected. Does BMI do the same thing?
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Mr. STERLING. I can't speak for BMI. I am an ASCAP songwriter.
Mr. BERENSON. Congressman, I am not that familiar with the distribution. All I know is that BMI does make its attempts to track every performance. If you want to, I can give this to you at a later date. I don't want to give you or Congress misinformation here. We try to pay those writers, songwriters, whose music is performed on regular radio or secular radio or religious broadcasting the same.
Mr. SENSENBRENNER. One final question of you, Mr. Sterling. Is your organization related in any way to ASCAP or has it received any financial or organizational support from ASCAP?
Mr. STERLING. It is not related to ASCAP. Yes, we receive support from ASCAP, but there is nothing sinister in that.
Mr. SENSENBRENNER. No, I don't think there is anything sinister. But I think that we have got to put it on the record. You are getting support from ASCAP?
Mr. STERLING. May I explain the support?
Mr. SENSENBRENNER. Surely.
Page 196 PREV PAGE TOP OF DOC Mr. STERLING. If you look at the little amount of money that Christian songwriters are already paid, we don't really have finances to launch a sophisticated political response to this attack that we have felt from the NRB. So we have joined, and some of these organizations have been longstanding. Some of us are new because it is a grassroots thing. I don't think our lack of funding or the lack of political savvy that we have in any way changes the truth of our statements. It makes perfect sense that we would go to our representatives, ASCAP or BMI, who we pay to do a job for us, and ask these people to help us out, to get our voice, so our voice can be heard. Our effort here is to make sure that people understand that this issue is not about the NRB and ASCAP. This issue is about the NRB and Christian songwriters and Christian publishers who will suffer.
Mr. SENSENBRENNER. From your own statement, Mr. Sterling, I don't think that Christian songwriters are getting all of the money that is paid by the religious broadcasters to perform their music.
Mr. Atsinger, is there a free market in music licensing payments?
Mr. ATSINGER. No, there isn't, and I just testified that we are dealing with what amounts to a functional monopoly. I don't mean that in a pejorative way. I think if you look at it definitionally, that is what we are dealing with. That is of course why the Justice Department has sued both ASCAP and BMI. They didn't sue them because they were practicing free market economics.
Mr. Sterling's analogy breaks down badly when he wants to liken it to Shoney's or to Ford Motor Co. The fact of the matter is Shoney's is in a free market for food products and they have competitors to drive the price down. Functional monopolies don't. I testified that every radio station, not religious, but every radio station, as a practical necessity must have a license from both BMI and ASCAP. We can't pick and choose. Because of the nature of the way it operates, programming is going to come in over which I have no control. As I testified, live church services, prerecorded programming, there are a variety of things. I may air a recorded a program that is always talk and on one day out of 2 years they may interview someone who sings a special number. You never know, so you have to as a practical necessity take licenses from all. That means that all radio stations must have those licenses. That is a practical monopoly.
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The fact of the matter is we have a consent decree that is supposed to act as a public utilities commission to regulate those functional monopolies. Shoney's has never been sued, to the best of my knowledge, for antitrust violations, nor has the Ford dealer that I think Mr. Sterling has been referring to.
The point is we have got here a record of a monopoly that has abused its market power, the Justice Department put a consent decree in place that was supposed to bring us some relief, and that relief is that they mandate that a fair per program license be offered that represents a genuine economic alternative. That is all we are asking for. And that is, of course, what the only court decision that has been out so far found in the Buffalo Broadcasting case.
Mr. SENSENBRENNER. Thank you.
Mr. COBLE. Mr. Delahunt tells me he has more time than he initially thought, so I will weigh in.
Mr. Atsinger, what percentage of the members of the Salem group, your group, subscribe to per program licenses rather than blanket licenses, if you know?
Mr. ATSINGER. I don't know the exact number. I would guess that of the 44 stations, about 20, maybe a little bit more than 20. Those that are music intensive obviously would take the blanket license. That is the appropriate license. Those that take the per program are stations that make limited uses.
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Mr. COBLE. The per program approach of course would be more time consuming on your part, would it not?
Mr. ATSINGER. Yes, it is an enormous administrative burden. If you elect the per program license, we are obligated to log every piece of music that goes over our airwaves, 24 hours a day, 365 days a year, and, for the ASCAP license, for example, that is not just ASCAP music, but their license requires that I log everybody else's, BMI, SESAC, public domain; the same for the BMI license.
Mr. COBLE. You opt to do that because you find it more cost effective for those stations?
Mr. ATSINGER. Where the music is drastically limited. We have a station in New York that, for example, originates music in 1.4 percent of its day parts. When you get it way down, yes, you can realize a reduced payment under those circumstances. You have to add back in your administrative cost, which varies. But it is a significant cost. Those stations that take the per program license that we have probably on average originate music, I would say, in aboutlet me see if I have got a figure here. I think it is probably about 6 percent of their hours originate music. When you get it down that low, you can realize a reduced payment under the current system, but then you have to calculate the administrative burden, which is significant.
Mr. COBLE. Mr. Atsinger, do any of your stations use the software that is offered or extended by the societies, presumably to ease the reporting requirements of the per program license approach?
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Mr. ATSINGER. We are attempting to integrate it. We have found some problems. We have written to them and identified the problems, and we are trying to work through it so that we can determine whether or not it will be a useful tool. We think it will be. We think it is a step in the right direction. It probably should have been done a long time ago.
But there are some glitches with it. For example, if you are a daytime only station, which a number of our stations are, if you come on at 7:30 in the morning in the winter, when your day is shorter, you get penalized for that period because it rounds off to the nearest hour, instead of charging you for a half-hour. So there are some of those kinds of technical glitches that we are working on and taking a look at. Mr. Hallemeier knows more about that license than I do. He is a C.P.A., and he has taken a hard look at it.
Mr. COBLE. I will visit with him subsequently.
Mr. Sterling, let me plow the same field that the gentleman from Wisconsin was plowing. What percentage of your income, I am not asking what your income is, but what percentage of your income would you estimate comes from the licensing fees paid to ASCAP by the broadcasters, by the retail endeavors, et cetera? Approximately.
Mr. STERLING. Maybe 2 or 3 percent. I am a member of the Academy of Gospel Music Arts; I am a songwriter/teacher for this group that is affiliated with the Gospel Music Association. In a recent weekend a few months ago we were out teaching a seminar on song writing and performance, and several of the guys in the faculty were hanging around trying to decide if we knew any Christian songwriters in Nashville, professional Christian songwriters who made their living strictly from songwriting. Of all the hundreds of names that we knew, we could think of one person who made their living strictly from Christian song writing, and a big part of that is because Christian radio already pays so little for what they do.
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We all have other aspects to our professional lives. I am a record producer, I am a choral composer anad arranger for church choirs. A lot of these people are either artists or singers or session singers or session musicians, that sort of thing. So we have to supplement it. We do this because it is important to us. It is not about the money, but at some point it is about the money.
Mr. COBLE. Mr. Sterling, I want to direct a question to you that is easily asked but perhaps not easily answered. In your statement you refer to the selfish financial gain of the broadcaster. Now, they make probably identical characterizations about the songwriters and their societies. Having said that, is it your belief that there may be a way you all, that is, all of you at the table, can resolve this problem so that all of you may realize some benefit?
Mr. STERLING. Absolutely. I have contended and our coalition has contended from the very beginning, in interviews and all, that this is a marketplace issue. It should not be before the Congress, in all due respect. This is a marketplace issue that should be settled, and it isn't. The irony is that right now there is a court case that is set to do just that, and the performing rights organizations are willing to live by the decision of that court case when it comes down. Yes, I would think that this is a negotiation item that could be done and it doesn't needbecause it puts into law something that is potentially very dangerous.
Mr. COBLE. Let me go over to Dirk, who is also a C.P.A. We have been told, Dirk, you are a C.P.A. as well.
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Mr. ALLEMEIER. He is not a practicing CPA at this time.
Mr. COBLE. Mr. Hallemeier, again not asking your personal salary, but if you can give me an estimate to this question. What do your radio stations make in gross receipts in 1 year, A, and what are your license fees to ASCAP and BMI in 1 year? In other words, what percentage would that be if you could give me a barnyard figure?
Mr. HALLEMEIER. With all due respect, Mr. Chairman, I consider that confidential information. I will be happy to provide that at a later date.
Mr. COBLE. All right. And I made it clear that I did not mean to imply that I wanted to know what your personal earnings are. I wasn't getting into that. I can appreciate your declination.
Do your stations, Mr. Hallemeier, do they subscribe to the per program or the blanket license or both?
Mr. HALLEMEIER. All three of our stations at this time are on the per program license for both ASCAP and BMI.
Mr. COBLE. Per program.
Mr. HALLEMEIER. Correct.
Page 202 PREV PAGE TOP OF DOC Mr. BERENSON. Mr. Chairman, I really was here to answer questions, but I really feel it incumbent upon myself to make a comment. Mr. Hallemeier indicated that you should not look at the money that was saved by using the per program, and they used all kinds of figures and statistics to say that they are paying too much money. Well, I just havewithout giving specific numbers, I don't want to divulge any confidential information with respect to earnings of any particular station, but I have a few stations here of Mr. Atsinger's with Salem. I took four of his stations, one is KFAXAM in Hayward, CA, religious formatted station on the BMI per program license. What happens is, when you compare what he would have paid under the blanket as compared to what he pays, what Salem pays to BMI on the per program, there is an 82.05 percent savings by using the per program over the blanket. If you look at KLTEFM in Kirksville, MO, also a religious formatted station, the savings rate is 84.86 percent over the blanket. If you look at KKLAFM in North Hollywood, CA, the savings is 85.71 percent over the blanket. If you look at WMCAFM, I say it is in New York, it actually covers the New York metropolitan area, there is a savings of 92.85 percent over the blanket.
Let me say this, Mr. Chairman and members of the committee. That is a pretty darn good savings, and yet they are sitting here saying they want more. They want more than that. If you look at the industry, from BMI's perspective, what license fees are paid to BMI by those stations represented by the National Religious Broadcasters, those having a per program license, the average savings is 75.64 percent over the blanket fees. I thought that would be of importance to the committee.
Mr. COBLE. When Mr. Delahunt completes his questioning, if Mr. Sensenbrenner has no more, I am going to give, Marvin, Bruce and Fred, a chance to speak if you all want to be heard, at the appropriate time.
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Mr. SENSENBRENNER. Mr. Chairman, I would object to that because we do have a rule that when witnesses come before the committee, there will be 24 hours notice. My understanding was that Mr. Berenson and the other counsel did not come to be witnesses before the committee.
Mr. COBLE. Objection noted, and I will withdraw that offer.
Mr. Hallemeier, when I said that I understood your declination to my question, I did not mean to imply that I thought my question was not a fair one. I don't think that the question I put to you was in any way unfair. But I can also understand why you might not be comfortable answering it. I wanted to clear the air on that.
Mr. HALLEMEIER. I would be happy to discuss it with you in the privacy of your office.
Mr. COBLE. That would be fine.
Mr. KOENIGSBERG. Congressman, in answer to your question, I certainly don't want to testify, not having any testimony to give, in answer to your question I have with me, the figures that you asked for for Mr. Hallemeier's stations. Obviously they are confidential so I can't disclose them in public, but we could come up with a process to provide that.
Mr. COBLE. We can work that out.
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Mr. SENSENBRENNER. Again, Mr. Chairman, I don't think that either Mr. Hallemeier or ASCAP or BMI should be forced in this hearing to disclose what amounts to proprietary information. I don't think that is what the purpose of the hearing is. I really think that we should be cognizant of the proprietary information that the people who are at the table do have and not force them to divulge that on the public record. That is not going to solve the issue of public policy that is represented by this issue.
Mr. COBLE. My question, in my opinion, was a pertinent one, but I am not going to go to war over the fact that I am not getting an answer. No hard feeling at all, Mr. Hallemeier, about that. About my offer to you three gentlemen to testify, I am a folksy guy and don't always adhere to strict parliamentarian rule. The gentleman from Wisconsin's point of order is taken and I have withdrawn that invitation. I will recognize the gentleman from Massachusetts.
Mr. DELAHUNT. Thank you, Mr. Chairman. I know that you are anticipating additional hearings in Washington. I would hope that the Chair and the subcommittee would extend an invitation to you gentlemen to come forward and testify. I for one want to make sure that you know that, speaking on behalf of the minority, we will make that invitation to you.
Mr. JOSEPH. I woule be delighted to testify in Washington, sir.
Mr. DELAHUNT. I want to make sure that everybody receives that invitation. Again, the gentleman from Wisconsin is correct. But I also want to add, too, that I do have some additional time and if you want, after the conclusion of the formal hearing, to come and have conversations with me, I will be more than happy to listen and to learn and to have you educate me, because that is why I am here, not to debate the merits of a particular proposal.
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I guess I would direct this to Mr. Atsinger and Mr. Hallemeier. I was pleased to hear the willingness of Mr. Sterling to negotiate and particularly to hear that he is willing to abide and live with the decision in a court that is soon to come down.
Are you willing to live with the court decision?
Mr. ATSINGER. The only court decision that at this point has come out with a final decision is Buffalo Broadcasting.
Mr. DELAHUNT. I am talking about the one that is pending. I understand there is a court decision that is pending that is going to come down soon. Are you willing to live with that decision? That is my question.
Mr. ATSINGER. I would say at this time, had the parties, in this instance ASCAP, agreed to let Magistrate Judge Dollinger hear the case, who heard the historic case that went on for about 7 or 8 years.
Mr. DELAHUNT. Can you answer my question? My understanding is it is a case that has been tried, I presume to conclusion, that the court is sitting reflecting and prepared to render a decision and an opinion. Mr. Atsinger, I am asking the question. Are you willing to live and abide by the decision? All it requires is a simple yes or no answer.
Mr. ATSINGER. I think it is a little more complicated. Let me just point out one thing, that when the Buffalo Broadcasting case was rendered it was appealed to Judge Conner, who was the judge that heard our case. Judge Carter upheld the decision in every respect except one. He said he didn't think that the consent decree allowed him to mandate an incidental use fee.
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Mr. DELAHUNT. I accept the accuracy and the veracity of what you just stated, and I am not debating that. It is my understanding that a decision is to soon be rendered by a court of appropriate jurisdiction. I heard from Mr. Sterling that he is willing, representing the songwriters, Christian songwriters, to abide and accept that decision. The question is, are you willing to abide by it? That is fine. If you don't, fine.
Mr. ATSINGER. I would have to say this. We represent 700 radio stations. I am not in a position here to commit, first of all, for those people. A consensus would have to be arrived at. That is a complex proposition. That is what I was trying to say to you. I simply can't say yes or no to you here today.
Mr. DELAHUNT. Then I appreciate that answer.
Mr. Sterling, again, my colleague from Wisconsin raised some questions about your relationship with ASCAP. Who do you represent? Who is part of your group? Do you have some names of Christian songwriters? I would be interested in hearing who they are. I presume some of them are here in the audience. Can I hear some?
Mr. STERLING. One of the groups that we represent is the Church Music Publishers Association, which represents many of the denominational church publishers, plus the music publishing arms, church music publishing arms of some of the corporate Christian publishers and recording companies. But, yes, we have got some songwriters here.
A group was formed recently to battle this called the Christian Songwriters Council. We recently released a statement putting out our objection to this. In that group we have the songwriters that represent 100 percent of the songs that were in the top 50 on last year's Christian recording play list, songwriters like Lowell Alexander. I have a whole list of them here.
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Mr. DELAHUNT. Read me the list. Are these people supporting your position today here?
Mr. STERLING. Absolutely. Lowell Alexander, Carolyn Arends, Loren Balman, Joe Beck, Aaron Benward, Jeff and Gayla Borders, Brent Bourgeois, Matt Brownlewee, Bob Carlisle, who wrote ''Butterfly Kisses,'' Pete Carlson, Bruce Carroll, Gary Chapman, Steven Curtis Chapman, Dave Clark, Claire Cloninger, Neal Coomer, Jim Cooper, Andrae Crouch, Grant Cunningham, Bill Cuomo, Den Daugherty, Scott, and Christine Dente.
Mr. DELAHUNT. Thank you, Mr. Sterling. It is a fair statement to say that you represent most of the individuals who write Christian songs in this Nation?
Mr. STERLING. I think so. There are songwriters all over.
Mr. DELAHUNT. I will be honest with you. I was very surprised by your testimony that many appeared to be, the vast majority, unable to make a living wage writing Christian songs.
Mr. STERLING. It is true. Statistically, a No. 1 song, which is a very difficult thing to get in radio, I have had two or three of them. A No. 1 song in Christian radio pays anywhere from 50 to 100 times less than a No. 1 song in country or pop.
Mr. DELAHUNT. Can you explain to me why that is? Why do Christian radio stations pay less? It appears to be a very naive question.
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Mr. STERLING. Part of it is just economics. They are smaller and their revenues are smaller. I don't begrudge that. Since the licenses are based on percentages of revenue, a small station bringing in less revenue is going to pay less in licensing. That is just economics. We understand that. Also, there are fewer Christian radio stations as a group than there are pop, so the pool of money is smaller. I think that is probably at the heart of why it is less. And a lot of Christian radio stations are in the nonprofit vein.
Mr. DELAHUNT. Again, being introduced to this issue for the first time, I would just express the hope that I think the chairman expressed earlier in terms of encouraging people to sit down and talk and discuss in good faith. I have a real reservation as to whether this is a matter that should be addressed by the U.S. Congress. I hear concerns that are being expressed in terms of antitrust. I respect the opinion of my colleague from Wisconsin, but I draw the analogy in terms of the marketplace as far as the worker is concerned. I would suggest that this is more analogous to collective bargaining than it is to antitrust.
Mr. COBLE. The gentleman's time has expired. The gentleman from Tennessee.
Mr. CLEMENT. Mr. Chairman, I want to say how much I have enjoyed being with my colleagues, as well as the witnesses, as well as interested citizens here and elsewhere. This has been a most informative, most educational, most interesting and a most challenging hearing. I am sure we are going to have more hearings in Washington, DC, in the near future concerning these matters.
Page 209 PREV PAGE TOP OF DOC Mr. COBLE. I thank you. It has been a very spirited hearing, and I do not think anybody fell asleep for the last 2 or 3 hours. I want to thank all the Members who traveled here today, the members of the subcommittee, the witnesses who testified, the Governor of Tennessee, Governor Sundquist, Representative Clement. Senators Thompson and Frist were interested in attending today but their duties, I am told, confined them to Washington for a vote on the tax package, I think, but I am not sure about that.
I would especially like to thank the people of Nashville for the cordial hospitality extended to us and for all of you who by your presence here indicate that you are concerned about these issues. It is important for us to hear directly from you, and that is one reason why we have a field hearing. It would have been far easier logistically to have stayed on the banks of the Potomac, but I wouldn't have heard any bluegrass music if I did that. There will be a following hearing, for your information, in Washington on the issue of music licensing, as I said earlier, on July 17 at 9 a.m. I, like Mr. Clement and Mr. Delahunt and Mr. Sensenbrenner, look forward to continuing to explore these very significant issues.
Did you want to be heard, Mr. Delahunt?
Mr. DELAHUNT. Just briefly.
I just want again to acknowledge the hospitality and the courtesy extended by the folks from Nashville and my friend and colleague Bob Clement. I really appreciate it, and I want to acknowledge the leadership of my chairman, Howard Coble. [Applause.]
Mr. COBLE. I won't gavel you down for that one.
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Mr. DELAHUNT. Lastly, on behalf of the people of Massachusetts, Cape Cod, Nantucket, and Martha's Vineyard, and particularly to the creative talent here, I want to extend an invitation to make sure that you come and visit us up in Massachusetts during the summer. It is a glorious spot.
Mr. COBLE. I thank you, Mr. Delahunt.
Ladies and gentlemen, for your information, we will keep the record open for 1 week for anyone here who would like to submit a written statement or testimony regarding this hearing.
The subcommittee stands adjourned.
[Whereupon, at 4:10 p.m., the subcommittee adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF DANIEL ABRAHAM, VICE PRESIDENT, PUBLIC AFFAIRS, GRAPHIC ARTISTS GUILD
The Graphic Artists Guild supports adding twenty years to the copyright term:
Page 211 PREV PAGE TOP OF DOCTo protect the works of American authors-in-fact, and secure the benefits of their work for them and their heirs;
To safeguard the United States balance of trade by conforming the American copyright term with that of the European Union;
To encourage American creativity and innovation;
To increase the copyright term in recognition of the greater life expectancy of creators; and
To counteract the threat posed to the American creative community by work-for-hire.
However, the Guild membership is deeply concerned that copyright term extension as currently contemplated will exacerbate the use of work-for-hire contracts, denying creators a share in the wealth generated by their works. Extending term extension to works-made-for-hire will increase the incidence of these contracts. Work-for-hire contracts, imposed on independent contractors by large clients on a take-it-or-leave-it basis, threaten the commercial viability of the independent creators whose work is vital to America's global pre-eminence in intellectual property.
THE GRAPHIC ARTISTS GUILD
The Graphic Artists Guild promotes and protects the economic interests of its members. It is committed to improving conditions for all creators of graphic art and raising standards for the entire industry. The Guild is a union that embraces creators of graphic art intended for presentation as originals or reproductions at all levels of skill and expertise. Graphic artists create a wide variety of intellectual property: company and product logos; illustrations for media and advertising; posters for political and sales campaigns; merchandise in the apparel, home decorative and stationery markets; and computer graphics that enhance and drive the digital marketplace.
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THE COPYRIGHT EXTENSION ACT
The Copyright Extension Act seeks to bring US copyright law in line with the rule of the lesser term in the European Union by adding twenty years across the board to all copyright terms. Twenty years is added not only to the term held by the individual creator, or author-in-fact, but to the term held by a corporate entity which becomes an author-in-law, through purchase of authorship from the author-in-fact under a work for hire contract.
Under this plan, corporate entities as authors-in-law receive a disproportionate benefit. The 20-year term extension for copyrights retained by authors-in-fact is an increase of only 16%, assuming an average lifetime of 75 years (20/(75+50)=.16). The term for works made for hire, however, will increase more than 26%, from the current seventy-five years to ninety-five years. This over-generous increase in the work for hire term has grave implications for the future of American creative work.
Creators today face intense pressure to sign contracts relinquishing authorship. The digital revolution offers lucrative prospects for reuse and repurposing of copyrighted work. Companies eager to profit from expanded markets and products resist paying creators royalties for such use, even though royalties are paid out of revenue the creator's work produces. Work for hire contracts, which strip authors-in-fact of their authorship, are routinely proffered to independent creative contractors on a take it or leave it basis. Such contracts are unjust in themselves because authors lose any future share in the earnings their works generate. In addition, these contracts typically offer rates of compensation that are below market even for limited use. Concentration in the media industry leaves the creator who resists signing these contracts with few options and few markets.
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Work for hire purchase of independent contractors' work is a feature of US copyright law that is not replicated throughout the European community . The work for hire term does not therefore need to be extended in order to bring US law into line with the European Union. The domestic film industry does benefit from the extension, as films are produced as works for hire. Protection for the film industry, however, does not justify extending the work for hire term twenty years in all areas.
Term extension legislation must be considered in light of the intent of the original legislative intent of the 1978 copyright law to increase protection for authors-in-fact, rather than authors-in-law. Even a small increase in client pressure could make it impossible for an author-in-fact to retain authorship of commissioned works. The additional twenty years of unlimited royalty-free use granted authors-in-law under a ninety-five year work for hire term will increase client pressure on creators. The public benefits when creators have a continuous share in the wealth their creativity produces. Continuous payment for continuous use encourages both use and additional creativity.
The copyright term was originally extended in part to ensure the benefits of an author's work would benefit two generations. Increasing life expectancy suggests the need for an increased term if the two-generation rule is to continue to apply. While no living creator benefits directly from copyright term extension, the twenty years added to the current term of life plus fifty will rightly benefit creators' heirs. But creators must retain authorship today for their descendants to reap any benefits from their creativity. Term extension must therefore work to help creators retain their authorship, not divest them of it.
Page 214 PREV PAGE TOP OF DOCTRUE LIFE PEAS SEVENTY
To conform American copyright law more closely to European Union rules and to safeguard individual creators, the copyright term should become a true life plus seventy. Only copyrights held by authors-in-fact should increase their terms by twenty years, while works made for hire should retain their current seventy-five year term. If a creator retaining authorship lived only six years beyond the work's creation, the work's copyright term would surpass the seventy-five year work for hire maximum. The potentially longer copyright term for works where the creator retained authorship would offer clients a strong incentive to eschew work for hire in favor of the creator retaining authorship, and to work with the creator in order to exploit a work's commercial possibilities for the longest possible term. Such a selective lengthening of the copyright term would be an intelligent way to safeguard for the future the creative community which is the source of America's global dominance in cultural exports.
The Graphic Artists Guild urges the Committee to pass a copyright term extension which is in keeping with the original legislative purpose of the copyright law. Term extension should be true life plus seventy, restricted to copyrights held by actual creators or their heirs. The term for works made for hire should not be extended, but should remain at seventy-five years. Distinguishing between authors-in-fact and authors-in-law will provide an incentive for client companies to work in partnership with creators so that both can benefit from the exploitation of creative work. Extension of the work for hire term will aggravate the current trend in copyright negotiations, where the independent creator often must sell authorship for a fraction of its value. True life plus seventy will bring American copyright law in closer compliance with the European Union than mere undifferentiated extension of all copyright terms.
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Copyright is created, defined, protected and controlled by statute and treaty. It does not exist in a truly free market. A free market most nearly exists when creator and client interests are balanced. Only when continuous payment is encouraged for continuous use of copyrighted work does the public receive full benefit from the power of American creativity and American commercial exploitation. To further the goal of a free market among equals, Congress must protect the individual creator, the author-in-fact, in the marketplace.
Hon. HOWARD COBLE, Chairman,
|New York, NY, July 17, 1997.|
House Judiciary Subcommittee on Courts and Intellectual Property, Washington DC.
DEAR MR. CHAIRMAN: During the hearing held in Nashville, Tennessee on June 27, a representative speaking on behalf of the National Religious Broadcasters Music License Committee [NRB] and on behalf of his own station, made certain allegations concerning the BMI per program license. I present a response herein.
The NRB claimed that the BMI per program license was not a genuine economic alternative. He also claimed that the NRB was comprised of small radio station owners. He indicated that the Committee should only look at the relationship between the per program license fee rate as compared to the blanket fee rate. He urged that the Committee should not look to the amount of money saved by those stations utilizing the BMI per program license.
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When reviewing the data, it becomes crystal clear why the NRB makes that argument. Without revealing the specific revenue of any one station, the following will illustrate why the NRB does not want the Committee to be aware of the savings realized.
Fact: Those radio stations represented by the NRB which are currently on a BMI per program license have saved almost 76% in license fee payments over what they would have paid BMI if those same stations were on a BMI blanket license agreement. [To put it another way, they saved over 4 times the amount they would have paid to BMI under a blanket license agreement.]
Fact: The major moving force in the NRB is Salem Communications Corp., (SCC), which is not exactly a ''mom & pop'' operation. SCC presently owns 46 radio stations. Many of those stations are located in larger metropolitan areas, such as Pittsburgh, New York [Rutherford, NJ], Seattle, North Hollywood, Portland, Houston, and Dallas.
Fact: Salem [SCC] savings is approximately 73%some stationsavings rate is as high as nearly 93%.
Fact: The other major moving forces in the NRB are:
Crawford Broadcasting Co. [owners of 10 radio stations in such areas as Buffalo, Los Angeles, Denver, St. Louis, and Portland. Their savings is over 57%.
Bott Broadcasting, with 9 stations, including stations in markets such as Oklahoma City, Fort Wayne, Memphis. Their savings is almost 79%.
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Douglas Broadcasting, with 5 stations. Their savings is almost 72%.
This truly represents an economic alternative to the blanket license. Yet, the ORB says that this is not enoughthey want more.
If you have any additional questions, I would be pleased to answer them.
Very truly yours,
|Marvin L. Berenson,|
|Senior Vice President-General Counsel.|
PREPARED STATEMENT OF HOAGY BIX CARMICHAEL, PRESIDENT, AMSONG, INC.
I am pleased to submit this statement on behalf of AmSong, Inc., a songwriter's organization representing almost two hundred (200) of America's greatest songwriters and musical estates.
We strongly urge you to support passage of Copyright Term Extension legislation and related provisions, as the future of Copyright Law and American cultural works is directly tied its fate.
The Copyright Term Extension Act is of tremendous significance, not only to songwriters and other creators,but to all Americans concerned about the protection of our unique national culture both here and abroad. The present term of copyright for a work published prior to 1978 is a flat term of 75 years. Works created on or after January 1, 1978 are protected for the life of the author plus 50 years. In contrast, the European Union has recently enacted legislation providing for an extension of the term of copyright to life plus 70 years, a term commonly provided for by most democratic nations outside of the United States
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The term of copyright protection afforded American creators is woefully inadequate. It is not only a minimum of 20 years shorter than the term of protection for European authors, but due to the shorter term of copyright in the U.S. our authors are not guaranteed equivalent protection in foreign countries. As a result, some of our greatest cultural treasures are falling into the public domain while they are still commercially viable and would continue to generate significant revenues for the U.S. from abroad. At the same time that these American works prematurely enter the public domain, European works created during the same year continue to enjoy copyright protection.
On a national level the loss of musical copyrights is dramatic. Distinctly American songs such as ''St. Louis Blues,'' ''Alexander's Ragtime Band,'' ''Over There,'' ''Stars and Stripes Forever,'' and ''Swanee'' have already fallen into the public domain. If the Copyright Term Extension Act is not passed this year, more of our distinctly American musical heritage, including ''My Buddy'' and ''I'll Build a Stairway to Paradise'' will follow into the public domain.
Moreover, the impact on the U. S. balance of trade if copyright term extension is not passed will be grave. Intellectual property is one of America's most lucrative commodities, one of the few areas in which the U. S. has consistently maintained a favorable balance of trade. Failure to extend the term of copyright would weaken our nation's position in the global marketplace. There is no benefit in virtually giving away to the world 20 extra years of our copyrights.
It is important to remember that when these works fall into the public domain, no savings are passed on to the consumer. Indeed, a Mozart CD costs no less than the latest Billboard chart-topper. Thus the creator is the only person left out while the recording artist, record label, producers, ad agencies, stores, and others continue to earn the same money.
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The loss of these musical copyrights is devastating on a personal level. For most songwriters intellectual property (e.g., their songs) is their only property. The average songwriter earns between $5000$20,000 dollars per year in royalties from the use of his or her songs. Based on these royalties the songwriter must provide for his/her family, now and in the future. Often, it is not until late in a songwriter's life (or even until after the songwriter's death) that artistic and financial recognition are achieved. With increasing life spans, at times even the songwriter him or herself is denied the royalties they deserveindeed, in several instances American creators have actually out-lived their own creations. The failure of our laws to ensure that the writer will be compensated for a reasonable period of time will have a chilling effect on the decision of our creators to continue to practice their craft.
We also urge you to support a provision which has been proposed in relation to Copyright Term Extension which clarifies that including a composition in a sound recording does not constitute ''publication'' under the Copyright Act of 1909 (the '' 1909 Act''). The Ninth Circuit decision in La Cienega Music Co. v. ZZ Top, 53 F. 3d 950 (9th Cir., 1995), ignored precedent in its opinion that the mere distribution of a record constituted publication of the pre-1978 compositions contained therein. Under the 1909 Act works published without proper notice were not protected by copyright. However, the Copyright Office and other relevant parties have never considered the distribution of phonorecords to be ''publication. '' The La Cienega decision is supported by neither judicial precedent nor industry practice. This flawed ruling must be corrected immediately in order to prevent thousands of American musical works from automatically losing copyright protection.
Page 220 PREV PAGE TOP OF DOC Time is of the utmost essence in these matters. If more songs are allowed to fall into the public domain at the end of this year, the harm to the creators of American culture, the principle of copyright protection, and the balance of trade will be irreparable. On behalf of all creators and consumers of American culture, we urge you to support the immediate passage of Copyright Term Extension legislation.
To: The Hon. Howard Coble, House Judiciary Committee.
|Motion Picture Association of America, Inc.,|
|Washington, DC, June 2, 1997.|
From: Jack Valenti.
As you know, some concern was expressed by some members as to whether creative participants in the making of a movie produced before 1960 would share in any negotiated compensation for revenues received by copyright owners during the proposed 20-year extension of copyright term.
The answer is: Yes, the producers will do just that, as per the attached.
But for the record, let me point out that in 1960, the Writers Guild of America negotiated and signed a binding contract with producers, drawing a line between films produced before and after 1960. At the guilds' request in 1960, the producers contributed $3.2 million to the start-up of health and pension funds for the three creative guilds. The guilds agreed that this contract would be binding in perpetuity, never to be reopened by either side. Since that agreement, the producers have contributed over $3 billion to the three creative guilds for their pension and health programs.
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This, therefore, will be the first time that any agreement, signed by both parties, guild and producers, which seals for all time a mutually acceptable contract, has ever been reopened.
The Alliance of Motion Picture and Television Producers has informed the Actors, Writers and Directors Guilds that participants in pre-1960 films (for which there are presently nonresidual obligations) will share in any additional revenues for those films in their 20-year extended term of copyright. That is, participants in pre-1960 films will receive a negotiated form of compensation earned in the extended additional 20-years.
AMPTP is ready to collectively bargain with each individual Guild to determine the precise amount of that compensation within the extended 20-year period.
The MPAA member companiesThe Walt Disney Company, Viacom, 20th Century Fox, Sony Pictures Entertainment, Universal Studios and Metro-Goldwyn-Mayerurge the Congress to move swiftly to bring the term of copyright protection in the U.S. up to the levels already provided by the European Union and many other countries.
PRE1978 DISTRIBUTION OF RECORDINGS CONTAINING MUSICAL COMPOSITIONS; COPYRIGHT TERM EXTENSION; AND COPYRIGHT PER PROGRAM LICENSES
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COURTS AND INTELLECTUAL PROPERTY
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
PRE1978 DISTRIBUTION OF RECORDINGS CONTAINING MUSICAL COMPOSITIONS; COPYRIGHT TERM EXTENSION; AND COPYRIGHT PER PROGRAM LICENSES
JUNE 27, 1997
Serial No. 39
Printed for the use of the Committee on the Judiciary
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Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
SONNY BONO, California
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRISTOPHER B. CANNON, Utah
Page 224 PREV PAGE TOP OF DOCJOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director
Subcommittee on Courts and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
SONNY BONO, California
Page 225 PREV PAGE TOP OF DOCEDWARD A. PEASE, Indiana
CHRISTOPHER B. CANNON, Utah
BILL McCOLLUM, Florida
CHARLES T. CANADY, Florida
BARNEY FRANK, Massachusetts
JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
MITCH GLAZIER, Chief Counsel
BLAINE MERRITT, Counsel
VINCE GARLOCK, Counsel
DEBBIE K. LAMAN, Counsel
ROBERT RABEN, Minority Counsel
C O N T E N T S
June 27, 1997
Page 226 PREV PAGE TOP OF DOC Coble, Hon. Howard, a Representative in Congress from the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property
Atsinger III, Edward G., president and CEO, Salem Communications Corp.
Attaway, Fritz, senior vice president, Government Relations, and Washington General Counsel, Motion Picture Association of America
Clement, Hon. Bob, a Representative in Congress from the State of Tennessee
Epstein, Julius, screenwriter and member, Writers Guild of America, West, on behalf of The Writers Guild of America
Hallemeier, Dirk, partner, Radio Property Ventures, and vice chairman, National Religious Broadcasters Music License Committee
Murphy, Edward P., president and CEO, National Music Publishers' Association, Inc.
Preston, Frances W., president and CEO, BMI
Reichman, Jerome, professor, Vanderbilt School of Law
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Sterling, Robert, president, Coalition for the Protection of America's Gospel Music Heritage, accompanied by I. Fred Koenigsbert, counsel for ASCAP
Sundquist Don, Governer, State of Tennessee
Weiss, George David, president, The Songwriters Guild of America
Williams, Paul, Songwriter, on behalf of American Society of Composers, Authors and Publishers, and the National Music Publishers' Association, Inc.
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Atsinger III, Edward G., president and CEO, Salem Communications Corp.: Prepared statement
Attaway, Fritz, senior vice president, Government Relations, and Washington General Counsel, Motion Picture Association of America: Prepared statement
Clement, Hon. Bob, a Representative in Congress from the State of Tennessee: Prepared statement
Epstein, Julius, screenwriter and member, Writers Guild of America, West, on behalf of The Writers Guild of America: Prepared statement
Page 228 PREV PAGE TOP OF DOC Hallemeier, Dirk, partner, Radio Property Ventures, and vice chairman, National Religious Broadcasters Music License Committee: Prepared statement
Murphy, Edward P., president and CEO, National Music Publishers' Association, Inc.: Prepared statement
Preston, Frances W., president and CEO, BMI:
Reichman, Jerome, professor, Vanderbilt School of Law: Additional information L52, 90
Sensenbrenner, Hon. F. James, a Representative in Congress from the State of Wisconsin: Prepared statement
Sterling, Robert, president, Coalition for the Protection of America's Gospel Music Heritage, accompanied by I. Fred Koenigsbert, counsel for ASCAP: Prepared statement
Weiss, George David, president, The Songwriters Guild of America: Prepared statement
Williams, Paul, Songwriter, on behalf of American Society of Composers, Authors and Publishers, and the National Music Publishers' Association, Inc.: Prepared statement
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Material submitted for the hearing
(Footnote 1 return)
Nor are ASCAP or BMI shy about suing for infringement. Stations that attempt to avoid playing ASCAP music to eliminate the need for a license are carefully monitored and are sued. In fact, it is my sense that ASCAP is probably the most frequent litigant in Federal courts, although this is difficult to track, because ASCAP is not permitted to sue in its own name.
(Footnote 2 return)
This 28% ASCAP music factor reported on KXEG, our Phoenix station, resulted from the fact that the station airs Spanish language programming on weekends and nights, and each hour contains some foreign copyrighted music. This type of music is virtually impossible to log under the strictures of the per program licenses offered. Consequently, we must concede it, which means paying for it whether or not ASCAP or BMI has any right to collect royalties for performance.
(Footnote 3 return)
Recording Industry Association of America (RIAA) 1996 Consumer Profile.
(Footnote 4 return)
Broadcasting and Cable Yearbook-1997 and BIA Publication-Feb. 1997
(Footnote 5 return)
''They're Finding God on the Radio Dial,'' The Washington Post, May 26, 1997 pg. A1, A8. Quoting a small sandwich shop owner who plays Christian music on the radio throughout the day.
(Footnote 6 return)