ly required by the Copyright Act.
"BMI argued that the language cited by the AMOA
'to afford the copyright owner a fair return for his
creative work,' reflects the broad goal of the legislation to
insure that creators are fairly compensated through
adoption of license fees establishing a reasonable value
for the use of the copyright works.
"We [the CRT] agree. The language in the statute is
not a directive authorizing the Tribunal to investigate
individual members or affiliates collections from the per-
forming rights organizations.
"We find that there is no indication either in the
statute or the legislative history, that Congress intended
the Tribunal to calculate rates or returns for each piece
of music and then base royalty adjustments on these
rates of return.
"We find nothing in the Copyright Act or its legisla-
tive history which indicates that the Tribunal was
intended to regulate the internal operations of the
performing rights societies. In our opinion the Tribunal's
authority is strictly limited to setting applicable royalty
fees and establishing the distribution to claimants."
Determination of the rate
"The Tribunal finds that the case presented by the
AMOA, including the industry survey, has failed to pro-
vide reliable data concerning the operating expenses,
revenues, or even return on investment of jukebox
operators.
"The Tribunal convened a conference of the parties
on February 13, 1980 in order to permit the Tribunal and
all of the parties to make suggestions concerning the
contents of a questionnaire which would be used by the
AMOA to survey the financial condition of jukebox
operators. At that conference the representatives of the
AMOA stated that it was too late to revise the
questionnaire.
"We note the limited response rate to the question-
naire, estimated by Peat Marwick to be approximately
14%. Dr. John Scarbrough, the Peat Marwick manager
in charge of the survey, testified: 'I wouldn't argue very
hard if you wanted to say that it was not a good
response.'
"The record of this proceeding contains detailed
testimony reciting the procedures utilized in the prepara-
tion and distribution of the questionnaire, which
presents significant questions as to the survey's
methodology and objectivity, as well as the nature and
scope of the data provided."
The CRT also noted that the survey findings were not
consistent with other evidence in the record, including
other industry surveys, such as the one conducted
annually by PLAY METER magazine.
"We have reviewed the testimony of the AMOA
witnesses- five jukebox operators, representatives or
distributors of the three American jukebox manufac-
turers, a 'one-stop' distributor of records, and a trade
association official. We find that this testimony does not
provide a basis for forming any representative picture of
the jukebox industry nor does it create a foundation for
the industry's claim of economic hardship. The
testimony does establish an industry practice to turn
over 50% of the gross revenues from jukeboxes to the
location owner.
BMI's proposal to apply the CPI to a proposed$19.70
rate that was mentioned in a congressional committee
report was ruled by the CRT to be " not in accord with
our statutory responsibilities in this proceeding."
"In reaching our determination in this proceeding, we
4
found the ASCAP/ SESAC concept of basing the rate on
marketplace analogies to be the most attractive. We
have examined the three marketplace analogies urged
upon us by ASCAP/ SESAC- the license fees paid by
general establishments using mechanical music,
background music services, and foreign jukebox fees .
These analogies, individually and collectively, are subject
to limitations and distinguishing features . We believe that
certain distinctions set forth in the AMOA pleading have
validity. While acknowledging that our rate cannot be
directly linked to marketplace analogies, we find that
they serve as an appropriate benchmark to be weighed
together with the entire record and the statutory criteria.
"We find that a per box payment of $50 is a
reasonable fee for the jukebox industry as a whole. We
have phased in the rate to accord the jukebox industry
opportunity to adjust , since tn our v1ew the jukebox
industry has ne ver peviouslt pa id reas o na ble
compensation for the use of copyrigh ted music. We note
that ASCAP/ SESAC , in their proposed findings , con-
cluded that an interim fee would be appropriate 'to afford
the coin machine industry an opportunity to adopt to
compulsory licensing at marketplace rates.'
Consequently, the adjustment of the jukebox rate on
January 1, 1982 will be limited to $25 .
"We are aware that some jukebox operators fun ction
on a narrow profit margin, and that certain jukeboxes
produce modest revenues. The Tribunal is satisfied that
adequate attention has been given to the small operator,
including the adoption of an amendment to the proposed
fee schedule that was proposed for the benefit of such
operators."
Maximize the availability of music
"We do not maintain that the jukebox rate is crucial
to assuring the public of the availability of creative works.
As has been observed in the pleadings, musical works
were created and exploited for many years, during
which, in our view, songwriters and publishers were un-
justly denied reasonable compensation for a commercial
use of their works. We concur in the ASCAP/ SESAC
finding that 'reasonable payment for jukebox perform-
ances will add incrementally to the encouragement of
creation by songwriters and exploitation by music
publishers, and so maximize the availability of musical
works to the public. We find nothing in this record which
would justify any reasonable concern that the schedule
we have adopted will deprive the public access to music."
"We reject the contention that copyright owners are
paid for jukebox royalties derived from record sales. We
recognize that performing rights are distinct from
recording rights. The Congress has determined that
copyright owners are entitled to be paid reasonable fees
for both. The Tribunal also rejects the contention that no
adjustment of the royalty fee should be made unless the
copyright owners established their 'need to receive' an
increase.
"We have given our analysis of the testimony
presented by the jukebox industry. We find nothing in
that testimony which would warrant a conclusion that
our schedule will deprive the jukebox operator a fair
income under existing economic conditions."
"On the basis of the record in this proceeding, we
have no basis for concluding that jukebox operators and
owners of establishments with jukeboxes make any
unique or distinctive contribution concerning creativity,
technology, capital investment, cost, risk, and the
opening of new markets for creative expression and
media for their communication. We find in this record no
PLAY METER , May 1, 1981