Broadcasting (Oct 1931-Dec 1932)

I BIR©AP€ASTD The NEWS MAGAZINE POL. 3, NO. 3 WASHINGTON, D. THE FIFTH ESTATE UGUST 1, 1932 $3.00 PER YEAR — 15c A COPY Society Breaks Off Negotiations With NAB By SOL TAISHOFF Mills Says Dealings After Sept. 1 Will be With Individual Broadcasters Based on Percentage of Station Earnings 7LATLY rejecting the proposal of he NAB that copyright music license fees be increased by about 25 )er cent, to $1,250,000 for 1933 ind 1934, the American Society of Composers, Authors and Publishers is preparing to begin negotiaions with individual stations for It percentage basis, effective Sept. This announcement was made o Broadcasting by E. C. Mills ruly 28, following protracted nerotiations with the NAB copyright :ommittee, acting under instrucions from the NAB board of directors. Mr. Mills said ASCAP does not desire to "arbitrarily break off" legotiations with the NAB, which s acting in behalf of all broadasters, but added that apparently .11 hope of reaching an amicable ettlement has been abandoned. He ;aid the ASCAP, after Sept. 1 vhen the existing moratorium >eriod ends, will proceed to issue icenses to stations on such terms .s can be arranged with the -indiidual broadcasters. Society's New Terms ^.SKED what this basis would be, te said ASCAP will be disposed to leal on a yardstick similar to the ne it proposed April 11, i. e., a percentage of gross receipts of tations on commercial programs, >lus a readjusted "sustaining" icense. If a station chooses a one'ear license, the rate will be 5 per ent. of gross, plus the readjusted sustaining" license. If it takes ut a three-year license, the rate rill be 3 per cent, of gross for the irst year, 4 per cent, for the second, and 5 per cent, for the third, ;ilus the predetermined "sustainng" license. Already 40 or 50 stations have :ontacted him, independently of he NAB, for the negotiation of tew licenses, Mr. Mills declared. Ie said that under the revised -ardstick, 310 stations actually vould pay lower fees than they iow pay under arbitrary flat rate icenses, these stations being in the low and intermediate power cateIrories. Substantially higher rates vould be demanded from about 100 tations, while the key stations of he networks would be called upon o pay "very greatly increased ees," he said. The plan would place the "burden"on the networks, he declared. Those stations which do not accept licenses under the terms proposed by ASCAP, Mr. Mills asserted, will not be permitted to use ASCAP-copyrighted compositions. "We naturally will sue those stations which violate the copyrights," he said. Sees $2,000,000 Gross ASKED how much he expected the plan to gross ASCAP, Mr. Mills said he expected that next year it would mean a revenue of approximately $2,000,000, and the following year of approximately $2,750,000, depending, of course, upon the amount of business done by the broadcasters. He called the per centage-of-gross plan "scientific," since stations would pay only according to their earnings. The break in NAB-ASCAP negotiations came after the NAB board, called into special session in New York July 21, rejected the proposition worked out by the Mills committee with the NAB negotiating committee, whereby the 25 per cent, increase from $966,000 to $1,250,000 would be effective for one year from Jan. 1, next, during which time a "legislative truce" in Congress would be declared and further negotiations would be undertaken towards an acceptable basis. While Mr. Mills indicated that the proposal was "accepted" by his board under protest, it was evident that the "legislative truce" pro Mills' Reply on Copyright Fees . . FOLLOWING is the full text of the letter submitted by E. C. Mills, general manager of the ASCAP, to the NAB copyright negotiating committee, which, in effect, breaks off negotiations toward a mutually satisfactory settlement of the music fee controversy. This letter was sent July 27 to Messrs. Morency, Klauber and Ashby, who comprised the NAB committee: "With reference to the negotiations between our respective committees, which have been in progress since yours of April 18, and to our action taken on July 12, to accept the proposal made by your committee at the joint meeting of that date, which proposal was on July 21 submitted to and rejected by your board of directors, and with further reference to the proposal then presented by your committee as authorized by your board at its said meeting, I am now obliged to advise you that the latter proposal is not accepted. "It is our feeling now that the respective committees have without success done their utmost to accomplish a mutually satisfactory adjustment of differences, and in view of the fact that your committee must of necessity depend upon the individual sanction of a great many broadcasters who are not members of the National Association of Broadcasters, as well as those who are members, of any plan or formula which your committee might approve, whereas our committee is vested with authority to definitely commit the members of this society, it is apparent that no purpose can be served by further conferences. "In these circumstances we desire now to advise you of our intention to proceed within the next few days to the making of the license of the society available, to broadcasters individually upon such terms as may be mutually agreed upon in each individual case. "We avail ourselves of this opportunity to thank your committee for its earnest and sincere endeavors, and we would appreciate an acknowledgment from you of receipt and understanding of notice of our intention to now proceed as above indicated." posal was the significant point from the ASCAP angle. The NAB board viewed the whole proposition as utterly unacceptable, since the legislative truce would mean calling off all steps to amend the copyright law so as to curb the excesses of copyright pools just when it appears that Congress is disposed to take action. Moreover, a oneyear license arrangement simply would mean the same negotiation muddle again next year. Proposal of NAB NAB's counter proposal, which ASCAP viewed as the' final proposition and turned down, called for the increase to $1,250,000 to stand for two years, during which time a joint committee of the NAB and ASCAP would get together on the drafting of a new scale based on a "per piece" arrangement, rather than on a percentage basis, plus a flat-fee sustaining license. The NAB resolution set forth that the negotiations for the "per piece" scale would have to be incorporated in the agreement and made a definite basis for the acceptance of the 25 per cent, increase. It was understood that under the NAB counter proposal, the additional sum paid ASCAP would come from the stations in a position to pay and from the networks. The load on the smaller stations would be lightened, it was agreed, through the working out of a revised scale by the joint committee. The NAB proposal was submitted July 26 to Mr. Mills by the negotiating committee, comprising P. W. Morency, WTIC, Hartford, chairman; Edward Klauber, first vice president, CBS, and A. L. Ashby, vice president and general attorney, NBC. The following day the proposition was rejected by the ASCAP board, apparently by a very close vote, since it is known that certain of the ASCAP leaders see the logic of the broadcasters' arguments, particularly in these times of economic stress. Broadcasters have maintained from the start, through their negotiating committee, that the fees on copyrighted music should be decreased rather than increased due to business conditions. Those at Meeting THOSE who attended the NAB board meeting in New York July 21 were President Harry Shaw, WMT, Waterloo, la.; members of the negotiating committee; A. J. McCosker, WOR, Newark, chair(Continued on page 29) iugust 1, 1932 • BROADCASTING Page 5