Before The LIBRARY OF CONGRESS United States Copyright 0%ice Copyright Arbitration Royalty Panel Washington, D.C. 20024 In the Matter of ) ) ADJUSTMENT OF THE RATES FOR ) Docket No. 96-6 CARP NCBRA NONCOMMERCIAL EDUCATIONAL ) BROADCASTING COMPULSORY LICENSE ) GBIERAL COUt&SQ OF COPYR!GHT, DIRECT CASE OF OcT x Nl] THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISH' ~ I ~ ~ @ AS CAP Philip H. Schae8er, Esq. Joan M. McGivern, Esq. J. Christopher Shore, Esq. Sam Mosenkis, Esp. WHITE K CAS E 1155 Avenue of the Americas New York, New York 10036-2787 (212) 819-8200 Beverly A. Willett, Esq. ASCAP Building One Lincoln Plaza, Sixth Floor New York, New York 10023 (212) 621-6289 Attorneysfo rASAP Dated: September 30, 1997 Before The LIBRARY OF CONGRESS United States Copyright Office Copyright Arbitration Royalty Panel Washington, D.C. 20024 In the Matter of ) ) ADJUSTMENT OF THE RATES FOR ) Docket No. 96-6 CARP NCBRA NONCOMMERCIAL EDUCATIONAL ) BROADCASTING COMPULSORY ) LICENSE ) REQUEST BY THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS FOR RATES AND TERMS FOR A COMPULSORY LICENSE The American Society of Composers, Authors and Publishers ("ASCAP") hereby submits, pursuant to 37 C.F.R. f 251.43 (a), (b), (c) and (e), its request for the terms and rates for a compulsory license for the nondramatic public performance of copyrighted published musical compositions in the ASCAP repertory by the Public Broadcasting Service ("PBS"), National Public Radio ("NPR") and the stations which they represent in this proceeding. The request is made pursuant to 17 U.S.C. $ 118(b)(3). ASCAP, based on the evidence presented in its direct case, requests that the Copyright Arbitration Royalty Panel ("the Panel") establish the following annual license fees for the performance of the music of its members for the five calendar years 1998, 1999, 2000, 2001 and 2002 by: (a) PBS and the television stations it represents in the amount of -- 1998: $5,201,000 1999' u 2000. u s ~ ~ s 200 1 2002. ~ n and; (b) by NPR and the radio stations it represents in the amount of— 1998: $3,580,000 II II 1999 2000. a s 2001, &t u 2002. s ~ ASCAP requests the foregoing because, as Congress intended, such license fees represent a fair return to the copyright owners of the music in ASCAP's repertory without unfairly burdening PBS, NPR, and the approximately 350 public television and 700 public radio stations that broadcast ASCAP members'usic. Attached hereto are: (1) a copy of the proposed rate and terms for a compulsory license which ASCAP requests be established by the Panel and adopted as a part of the Code of Federal Regulations; (2) the Witness Statements and Exhibits submitted in ASCAP's direct case and (3) a schedule of the past records which are incorporated by reference as part of ASCAP's direct case. BACKGROUND Notwithstanding their efforts to negotiate a voluntary license agreement as contemplated by 17 U.S.C. $ 118(b), ASCAP, acting on behalf of its members, and PBS and NPR, acting on their own behalf and the television and radio stations which they represent, were unable to reach agreement. The rights which were the subject of this unsuccessful negotiation are the rights afforded to ASCAP's members under the 1976 Copyright Act with respect to nondramatic public performances of their music by public broadcasting. Twenty years ago, shortly after enactment of the 1976 Copyright Act, a dispute arose as to both the rate to be charged for, and terms of performance of, the music of ASCAP's members by public broadcasters. That dispute was then settled by the Copyright Royalty Tribunal. 42 Fed. Reg. 25068 (June 8, 1978) (ASCAP Ex. 8). Since that time, licenses between PBS and NPR with ASCAP have been settled by agreement, negotiated every five years. This present proceeding is only the second occasion in almost twenty years when the parties were unable to reach agreement as to the details of the license by which the public broadcasters would have the right to broadcast the music in ASCAP's repertory. It is thus only the second time that a compulsory license has been sought. ASCAP SEEKS JUST AND FAIR COMPENSATION FOR THE USE OF ITS MEMBERS'USIC BY PBS NPR AND THE STATIONS THEY REPRESENT 1. The Growth and Commercialization of Public Broadcastin Upon the failure of ASCAP, PBS and NPR in 1997 to achieve a voluntary settlement as to the amounts to be paid to ASCAP for use of its members'orks, ASCAP began preparations for this proceeding. Those preparations resulted in the marshalling of the direct evidence which is being submitted to this Panel. The evidence before the Panel submitted by ASCAP concerning the growth and current status of public broadcasting is primarily in the form of expert testimony given by James Day, James Ledbetter and Robert Unmacht, as well as a vast amount of data gleaned from publications authorized or undertaken by the public broadcasters themselves. Those documentary admissions of public broadcasting stations and their representatives in all respects support the opinions of ASCAP's experts as well as ASCAP's position as to the growth and commercialization of public television and radio. Whether caused by the policies of the national government or its own natural evolution, public broadcasting is today a behemoth, receiving over two billion dollars annually from solicited memberships, commercials from businesses, contributions from federal, state and local governments, and sales of goods, services and other compensated activities. Public broadcasting is in all respects competitive with commercial broadcasting in market share, revenues generated, costs of programming, and other relevant indicators. Urged by Congress to become self-supporting, the stations and their representatives, PBS and NPR, have undertaken programming and activities specifically designed to maximize the commercial value and financial rewards to them of their broadcasting. The direct evidence before the Panel submitted by ASCAP also demonstrates the voracious appetite public broadcasting has for ASCAP's music. Such music, whether "popular" or "serious," is critical not only for public broadcasters'rogramming in the ordinary course, but is often the vehicle by which public broadcasting stations achieved in 1995 over three quarters of a billion dollars in pledges of funds from the viewing and listening public and commercials from business sponsors. Nor is there any real likelihood that during the future years, that appetite for music will be significantly diminished. ASCAP has submitted to this Panel an independent survey of viewers of public television in representative markets as to their interest in music programming. The results are that over 60% of those viewers expressed a desire for music to continue and even increase as a feature of public television. The record establishes that there is no reason why ASCAP's membership should be required to accept less in license fees on a relative basis for the performance of their compositions than they already receive from the commercial broadcasters with whom the stations represented by PBS and NPR clearly compete. 2. ASCAP's Prooosal To determine appropriate license fees for the public broadcasters, ASCAP proposes that those stations pay fees comparable to those which have been established after years of negotiation and rate-making litigation with the commercial broadcasting industry. The analysis and development of what those fees should be are set forth in the direct testimony of Dr. Peter Boyle, ASCAP's Chief Economist. That analysis is based upon the concept that revenue produced for the public broadcasters as a consequence of the sale of memberships and underwriting are comparable to the broadcasting revenues earned by commercial stations. In essence, public radio and television stations broadcast programs to achieve underwriting by business and interested institutions (i.e., sponsorship or non-governmental contributions) and the purchase of entertainment by viewers and listeners. It is therefore appropriate to use such revenue as a basis upon which royalty fees are to be paid, particularly when the music for which royalties are paid is so important to these stations. It is also appropriate in seeking to value the right to perform music to use as a reference the values of that use which have been established in the marketplace. ASCAP's proposal does this valuation by providing that public radio and television broadcasters pay the same proportionate share of their revenues earned through programming as do commercial broadcasters, adjusted or refined to consider the respective proportion of ASCAP music used by those stations.-" ASCAP's ability to make those adjustments is made possible by its access to the annual survey conducted by it (of which Dr. Boyle is in charge) for purposes of distributing ASCAP's revenues to its members. That survey is a scientific sampling, recognized repeatedly in the courts, of what music is played annually by various media in the United States. It should be recognized, however, that the public financial data released to date by PBS and NPR, together with the stations they represent, does not disclose the actual amounts of revenue realized by public broadcasting stations in 1996 and 1997. Because we were unable to obtain that information given the limitations on discovery established in this proceeding, ASCAP must extrapolate from previous data for the purpose of presenting its proposals. If more current information is disclosed, we will request an opportunity to refine ASCAP's proposal. -" For purposes of this proceeding, ASCAP has not considered so-called ancillary income or government funding as revenue for purposes of fixing license fees. Good arguments can be made that these amounts, amounting to over $ 1.003 billion in revenues in 1995, should be considered. ASCAP, while not so asserting that position at this time, reserves its right to do so on future occasions.