H.R. 789 is a direct attack on the small business people that have made American music the most popular and profitable in the world. Several important points show that this legislation is both unjust and unneeded.

First, songs are the creative property of songwriters, just any other product is the property of the person who creates it. H.R. 789 is a legislative attempt to seize private property and give it to the users of that property for free. H.R. 789 represents government interference in a commercial dispute and government price-fixing at its worst.

Second, restaurants profit from the use of our music. Our music helps them sell, enhances their atmosphere, makes the customer linger and spend and contributes to the bottom line. We should have the right to be compensated for each and every commercial use of our property, including this one.

Third, the amount paid for the use of our music is relatively minuscule to the user. The National Restaurant Association's own 1994 data and publications show that the total cost for music and entertainment for restaurants was between .3% and .7% of total expenditures. ASCAP's data show that the average license fee for a restaurant is $1.58 per day; that's less than the cost of one drink. Although the cost to users is minuscule, the loss of income to songwriters should this legislation pass would be devastating.

Fourth, ASCAP has repeatedly tried to negotiate a commercial settlement with the National Restaurant Association, as it has successfully done with the National Licensed Beverage Association and dozens and dozens of other organizations. Officials of the National Restaurant Association told us in 1995, "We do not wish to negotiate with you under any circumstances." They still refuse to negotiate and insist on legislation in this commercial dispute, even though the Congressional Research Service has concluded that the terms we have offered would exempt over 65% of all restaurants in the country from this license. The response of a National Restaurant Association witness before the House Small Business Committee last year was "we want more." In fact, the executive director of the National Licensed Beverage Association stated," We got more out of this agreement than we could have ever gotten out of legislation."

Finally, the licensing system in use by the performing right organizations is the most efficient method ever created for the use and compensation for music. It is in global use; it is sanctified in international treaties, and it should be protected by the Congress of the United States.

STATEMENT OF MR. WAYLAND HOLYFIELD
on behalf of
THE AMERICAN SOCIETY OF
COMPOSERS, AUTHORS & PUBLISHERS
IN OPPOSITION TO H.R.789

My name is Wayland Holyfield. I am a member of the Board of Directors of the American Society of Composers, Authors and Publishers, known as ASCAP. I am also President of the Nashville Association of Songwriters International. But above all, I am a songwriter.

Except for this attempt by the NRA and others to use my property for free, I doubt if any of you ever would have heard of me. But I think you might have heard of some of my songs like "Could I Have This Dance", performed by Ann Murray, or "Red Necks White Sox and Blue Ribbon Beer" sung by Johnny Russell, and I might suggest, plenty of patrons in cafes and taverns all across this country.

That is the fate of most songwriters -- despite wide-spread popularity of their work -- to be in the background. The overwhelming majority of us share in neither the fame nor the glamour nor the fortune that the performers of our songs realize. Indeed, most of us struggle to earn a living from songwriting. But that's o.k. We're doing something we love. What's not o.k., and what we don't love, is always having to defend our right to earn fair compensation from the use of our songs against the claims of those who benefit from that use but don't want to pay for it.

I say "our songs" deliberately, because that is what they are, ours. Just as any other product which human beings create belongs to them, those songs are our property.

And H.R. 789 is about the government seizing our property and giving it away, not even under government power of eminent domain, but through legislative interference in a commercial dispute.

Mr. Chairman and Members of the Committee, the proponents of this bill try to justify their greed by saying they're just out to take care of small "Mom and Pop" establishments. They somehow try to paint us, the songwriters, as some big, evil, New York and Hollywood monsters called ASCAP, BMI and SESAC. But the truth is we songwriters are the smallest of small businessmen and women. We are ASCAP, BMI and SESAC, and we're not monsters at all! So don't let the NRA make us out to be the bad guys because we're not. We are American songwriters who have made American music the most popular in the world. We have done it without government assistance. There is neither a minimum price for a song nor a minimum wage for a songwriter, nor a requirement -- as there is in other countries like Canada and France -- that broadcasters play a minimum quota of our music. Yet despite our struggles there is not a place on this planet which you will visit without hearing American music. Yes, we have done that. We have spread American culture. We have contributed year in and year out to the positive side of our nation's balance of payments. And we have done it at enormous sacrifice.

Our efforts should be the pride of all Americans. Instead, we are here defending ourselves against legislation which would take our property and give it for free to people who profit from it. Rather than receive praise for our achievements, we would be punished. Is this what the American people have been saying in recent elections? Is this the reward for our sacrifice and entrepreneurship? Is this what America was ever about? Is this the free market at work? Is this getting government off our backs and out of our pockets? The answer to all these questions is no. H.R. 789 represents government interference in the market-place at its worst! It is governmental price fixing; it is "Big Brother" entering into a purely market-place dispute and siding, ironically, with groups renowned for their opposition to government interference in the market-place.

Mr. Chairman and distinguished Members of this Committee, the supporters of H.R. 789 have engaged in the classic and reprehensible "straw man" technique of political attack. They know that they can't pick on songwriters because Americans would balk at the unfairness of such an attack. So instead they have tried to make this a fight with ASCAP, BMI and SESAC. They hope that their target audience won't notice that the performing right organizations are merely the representatives of the songwriters and that songwriters couldn't possibly track the use of their music and earn a living without them. But please don't be fooled. The attack on ASCAP, BMI and SESAC is in reality an attack on each and every songwriter in this country.

Mr. Chairman, let's consider what our music does for businesses represented by the National Restaurant Association, which has stated repeatedly that this music is only "incidental" and that therefore they shouldn't have to pay for it. The overwhelming reality is that this music helps them sell! It enhances their atmosphere! It makes customers linger and spend! It contributes to their bottom line. If it did none of those things, the complaints of our adversaries could easily be resolved. They could turn the music off. Or, as Justice Holmes said of restaurant owners in their dispute with songwriters almost 80 years ago, "If music did not pay, it would be given up."

Mr. Chairman, during the long course of this struggle songwriters have faced not merely the strength of powerful organizations, but outright distortions of the truth by these organizations and their allies. Let me furnish you with examples:

1. Mr. Sensenbrenner circulated a "Dear Colleague" letter earlier this year asking support for his Orwellian misnamed "Fairness in Music Licensing" bill, H.R. 789. Among the many attacks in his bill on songwriters, there is a section which would exempt restaurants from payment for radio and t.v. music. His letter goes on to cite the licensing fees paid by the Dubliner Tavern in D.C. as an example of our "unfairness," claiming that payments by the Dubliner come to $3,000 per year. The truth is, Mr. Chairman, that the fees paid by the Dubliner are about half that. But more important, they are paid for live music, a type of music that would be left untouched by his bill.

2. The NRA has claimed that the exemption we offered, which the Congressional Research Service said would exempt over 65% of all restaurants in the United States, is unacceptable because the gross square footage includes parking lots. Mr. Chairman, that is an out and out lie.

3. The NRA claims ASCAP and BMI "arbitrarily" set fees. Yet the NRA refuses to negotiate a mutually acceptable fee schedule. So they want to have it both ways: we are arbitrary for setting fees ourselves, but they refuse to negotiate the fees with us.

4. The NRA claims the licensing agreement we negotiated with the National Licensed Beverage Association lasts only for a year. In fact, it is a 3 year agreement.

5. The NRA claims they can't find out what's in the repertories of ASCAP, BMI and SESAC; they say that if only they knew what was in those repertories they could choose specific music and thereby deal with only one performing right organization. This, of course, is another "straw man." In the first place, they could not control what comes in over the radio. So if they want to use radio music, they can't choose between us. But note the following: A license fee gives the right to use all our music as frequently as the licensee wants. Furthermore, all three organizations make their repertory information available by mail, 800 telephone numbers, and over the Internet. In other words, it is available right now without legislation. But really, Mr. Chairman, has anyone in this room ever heard a restaurant patron say "I've heard enough BMI, I now want you to play some ASCAP music." Or, "I think I've had enough ASCAP songs, I want some SESAC songs." This is an absurd argument on its face. Patrons ask for the songs they know, not for the music in the repertory of an organization they never heard of. But Mr. Chairman, if users wanted to turn the radio off and use tapes and CD's and construct their musical profile so as to use the music of only one performing right organization irrespective of what their patrons wanted to hear, that can be done right now, without legislation, because each performing right organization provides the access to repertory information they seek.

6. The NRA claims fees are excessive. Mr. Chairman, their own 1994 survey of the economics of the restaurant business gives the lie to this claim. Their survey broke down the expenditure dollar of restaurants by percentage for everything that is spent. This survey showed that for restaurants in which the average check per person was under ten dollars, the total cost for music and entertainment was but three tenths of one percent, and for restaurants in which the average check per person was over ten dollars, but seven tenths of one percent. Note please, Mr. Chairman, that this is the total cost for music and entertainment -- including the amounts paid to musicians and for equipment -- not just for licensing fees. Now if they really want to get some relief from you, they ought to ask you for an amendment which would cut the amounts charged by food suppliers, because that turns out to be the largest cost they have, as high as 29% of their expenses.

7. The NRA claims it doesn't want to negotiate an agreement because the terms might change at the end of the agreement. In other words, unless we agree to a fee in perpetuity, they claim they would somehow be treated unfairly. I ask you how many commercial agreements do any of you know of which set prices for products in perpetuity? I thought we were committed to a free market.

Mr. Chairman, when a bar or a restaurant or a retail establishment plays my music, or that of my colleagues, they are doing so for one reason: to enhance their bottom line. Our music is being used for the profit of the establishments' owners, and simple fairness demands that we be compensated for that use.

Over and over and over again, we have tried to settle this dispute with our opposition through commercial negotiations, just as we have done with many other groups over the years. Just as we did last year with the Radio Music Licensing Committee representing the overwhelming majority of radio stations in this country. Just as we did this year with the National Licensed Beverage Association, the group which began this whole fight over music licensing. The Executive Director of the National Licensed Beverage Association said of the agreement which she signed with the performing right organizations, "We got more out of this agreement than we ever could have gotten out of legislation. This is definitely the way to go." But Mr. Chairman, the NRA told us in 1995, "We do not wish to negotiate with you under any circumstances." Despite all the efforts of Members of this House and the other body, they have not budged from that stance. Such an arrogant stance should be not be rewarded.

Mr. Chairman, this legislative "taking" of our property began with the cry that the "mom and pop" restaurant needed relief when they played radio or t.v. music. You know that in an effort to help the so-called "mom and pops," we offered to exempt such uses at all eating and drinking establishments 3,500 sq. ft. or less, and we included an exemption based on equipment, regardless of size. The Congressional Research Service reported that the 3,500 sq. ft. figure would have exempted 65.2% of all eating establishments and 71.8% of all drinking establishments. Clearly, we took care of the "moms and pops". But for the NRA it wasn't enough! Their representative went before the House Small Business Committee last year and said "we want more." Ironically, the commercial agreement negotiated with the NBLA granted the 3,500 sq. ft. exemption as part of the package. However, NRA members are ineligible because their leaders want Congress to do their work for them.

We have offered time and again, and we repeat that offer before you now, to meet with them anywhere, anytime, anyplace to settle this dispute in the marketplace, where it should be settled. Congress should not be in the business of fixing prices for my music any more than it should be fixing any other prices.

Mr. Chairman, ASCAP, BMI and SESAC are not the real targets here. American songwriters and publishers are the real targets of these music users. ASCAP, BMI and SESAC are invaluable organizations for music creators. We cannot know who is using our music in our own hometowns let alone throughout the United States and the world. Without these organizations, we would be broke. And for the music user, this service, which gives unlimited access to huge repertories for modest fees -- the average payment to ASCAP is $1.58 per day -- is also indispensable. For if every restaurant and radio station had to track down every owner of the copyrighted music they wanted to use, they would find the task impossible, and they would lay themselves open to copyright infringement suits from a multitude of copyright holders. This is the most efficient system for clearing the use of music that ever has been devised. It is used throughout the world. To complain that those who own musical property are somehow not entitled to fair compensation because they belong to organizations without which they could never be compensated for the use of their music is ludicrous.

Now, Mr. Chairman, I'd like to address the NRA's red herring of a demand for local, individual arbitration for each restaurant throughout the country. There are really two aspects to that demand.

First, there is the question of the determination of the facts which tell you how much an individual restaurant should pay under the uniform nationwide rate schedule. For example, one such fact is the seating capacity of the restaurant. As ASCAP has said time and time again, we would be happy to have disputes over those facts resolved through arbitration on a regional basis. But as always, the NRA is not interested in negotiating anything.

Second, there is the question of the determination of the rate schedule itself. That is an entirely different matter, and let me tell you why.

Under the normal workings of the copyright law, if a restaurant owner in Los Angeles wanted to perform my song "Only Here for a Little While", he would have to come to me, in Nashville where I live, and get a license from me, at a rate I would determine. If he didn't like my price quote for the use of my property, his only option would be not to use it.

But I simply don't have the resources to find and negotiate individually with that restaurant, let alone every restaurant in the country that wants to use my music. And, assuming that the restaurant owner wants to obey the law, that restaurant does not have the resources to find and negotiate with me and every other songwriter of the works he wants to perform in advance of the performance (or, for that matter, at any time).

That is why we have a system of collective licensing through performing rights societies like ASCAP and trade associations of users, a system that exists in every civilized country. Under that system, I, and every other individual songwriter member of ASCAP, gave something up by joining -- the right to say no to any particular use, and the right to set an individual price for the performance of my music. In exchange, I and my colleagues got a means of nationwide licensing of our music and the practical ability to earn a living from our craft.

But that restaurant owner, and all other users, made a similar trade. They received the benefit of an administratively simple, cost-efficient method of obtaining all the property that they need through one ASCAP license, at a reasonable fee. But that system only works if they, too, negotiate for a license on a collective basis -- in their case, by having industry-wide negotiations on rate determination proceedings by their trade associations, which represent the full spectrum of restaurateurs across the country. That is exactly what has happened with our deal with the NLBA, and with countless other trade associations and industry-wide negotiating committees.

It is this copyright owner collective-to-copyright user collective system of licensing which has allowed the copyright law to work in this area. My colleagues and I have agreed to give up our exclusive rights and give a license to whoever wants one, even before an agreement on price exists. My colleagues and I have agreed that the price charged will be uniform throughout the country, to protect individual users against discrimination and abusive pricing. And to ensure that reasonableness and uniformity, my colleagues and I have agreed that one court, which has developed over fifty years of immense expertise in this area, will set the price if we cannot agree. The essence of this system is that both the negotiations and, heaven forbid, any litigation over price, should be between my collective association -- ASCAP -- and the users' collective association, whatever it may be. Those user associations, which have immense resources -- far greater resources than ASCAP, I might add -- should hardly complain about going to that expert court for a rate determination in light of the expense they impose upon me and my colleagues to locate them throughout the length and breadth of this land, and try to persuade them to take a license to which they are automatically entitled if they but ask. If they don't want to do that, let their individual members obey the law by coming to me -- and every other songwriter -- individually before they use my music. They can't have their cake and eat it too.

And, I should add that this system ensures that ASCAP's rates will not only be reasonable, but also uniform and non-discriminatory throughout the country. As the U.S. Court of Appeals for the Fourth Circuit -- which sits in Richmond, Virginia -- has said in looking at this very issue in 1994, that desirable uniformity would be lost, and an immense expense unjustifiably imposed on my fellow songwriters and me, if the NRA's demand were to be law.

In sum, the NRA's complaint that its individual members can't participate in the rate determination process is a red herring. If the NRA would only do its job, and sit down at the bargaining table with us -- as the NLBA has done to the great advantage of its members -- there would be no need to waste time on this issue.

Mr. Chairman, many accusations have been made about the performing right organizations. One is that they are monopolies. It is interesting to note that the United States is virtually the only country in the world which has more than one licensing organization. Actually, we have three which compete vigorously with one another. Moreover, the two largest operate under consent decrees for the protection of the users of music and those whose music is used. These decrees guarantee fairness and non-discrimination in the licensing system, and in the case of ASCAP, accuracy in the distribution of the funds received for the use of music. Indeed, as mentioned earlier, the most recent agreement between ASCAP and the Radio Music Licensing Committee representing over 9,000 radio stations was reviewed by the Federal Court which has jurisdiction over the consent decree. The Court found it to be both fair and non-discriminatory. We can only wonder what the reaction of the National Restaurant Association would be if the government decided that the nature of their business was such that they would have to seek government approval for the prices they charge their customers and government approval for the method in which they distribute their income. Yet those are constraints performing right organizations operate under.

Mr. Chairman, I do wish to address three additional points for the record:

First, I am fully aware of, and fully support, the testimony given in Nashville by my colleague Robert Sterling about the provisions of H.R. 789 which would do such serious harm to the writers of Christian music. These provisions are sponsored by so-called "religious broadcasters" who are nothing but commercial broadcasters who use a very worthwhile format for their own commercial profit making ends. That they hide behind the cloak of religion to pursue even greater profits at the expense of the individuals who toil to create inspirational Christian music is, to me, reprehensible. There is absolutely no justification for the radical reduction in the already reasonable license fees paid for the use of the property created by these hard-working and devoted American Christian songwriters. And we should not lose sight of an important point -- while these religious format commercial broadcasters make it seem as if they are only seeking a break for their particular stations, their legislative proposal would radically reduce the license fees paid by all radio broadcasters. I hope you are as outraged by this proposal as I am -- it should be emphatically rejected.

Second, I also want to strongly endorse the testimony given by Ed Murphy of the NMPA and my colleague Paul Williams and others who are urging Congress to enact the "cure" for the dreadful decision in the La Cienega case, a decision completely at odds with the practices of the music industry, the Copyright Office, and the now 20-year-old precedent of the Rosette case. It is, to me, unconscionable that the copyrights of America's great music should be put in jeopardy. It is not merely the music publisher who is at risk -- every song has one or more writers, and we earn our daily bread from our copyrights. As this legislation overwhelmingly passed the House last year, it is noncontroversial, to say the least, and should be speedily enacted. On behalf of ASCAP's songwriters and publishers, I want to thank you for your consistent leadership on this issue, and to commend both you and Congressman Bono for introducing legislation to resolve this dilemma, and Congressman Conyers for his strong interest in this matter.

That brings me to my third point, the term extension legislation. Here, too, I want to endorse the testimony of Frances Preston, President of BMI and others who support this much-needed legislation. Notwithstanding the carping of some who take a flawed theoretical view rather than a practical one, this legislation is eminently sensible. Again, on behalf of ASCAP's songwriters and publishers, I wish to commend Congressmen Bono and Gallegly for introducing term extension legislation in this Congress. Who would not support legislation which will so beneficially enhance our balance of payments with our European and other worldwide trading partners?

There is a final point I wish to make, Mr. Chairman. I find it reprehensible, to put it mildly, that those who want the enactment of H.R. 789 continue to attempt to hold the La Cienega and term extension legislation "hostage" unless their greed is satisfied. This is just the sort of nonsense that outrages the American people, who have made very clear their disgust with Congressional inaction and gridlock. I hope, Mr. Chairman, that the wiser and saner heads that you and the majority of your colleagues have on these matters will prevail, and we will see the speedy enactment of the La Cienega and term extension legislation. In sum, Mr. Chairman and Members of the Committee, we ask that you reject H.R. 789 for what it is: blatant government interference in a commercial dispute, and the unjustifiable taking of private property to be used for profit. H.R. 789 is about simple greed -- the greed of those who give lip service to support of the market-place and opposition to government interference, but who want the government to give them a free ride when they use the property of others.

revised 7/14/97 revised: 7/14/97

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