ASSEMBLY CONSUMER AFFAIRS AND REGULATED PROFESSIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 1698

with committee amendments

STATE OF NEW JERSEY

DATED: MAY 20, 1996

      The Assembly Consumer Affairs and Regulated Professions Committee reports favorably and with committee amendments Assembly Bill No.1698.

      As amended, this bill establishes certain rights and responsibilities between the parties to contracts for the payment of royalties for the performance of musical works on certain business premises. The owners of copyrighted music are usually represented by "performing rights societies," such as ASCAP (the American Society of Composers, Authors and Publishers) and BMI (Broadcast Music, Inc.). Among their other activities on behalf of the copyright owners they represent, these societies negotiate "blanket" contracts with individual small businesses, such as restaurants, bars and retail establishments, for the performance, either live or recorded, or broadcast on television or radio, of the copyrighted works in their respective repertoires. Because of the powerful position these performing rights societies have assumed, the average small business owner may be at a disadvantage in negotiating a fair contract. Often times, the proprietor is left feeling he or she has no choice but to contract with several performing rights societies, just to be certain that he or she doesn't run afoul of the federal copyright laws and open himself or herself up to litigation.

      This bill requires performing rights societies to make certain information regarding the musical works represented available so that the proprietor may make an informed decision; and provides certain safeguards and remedies once the contract is executed. Specifically, the bill requires performing rights societies licensing music in the State to file a current list of songs for which they collect royalties on behalf of copyright owners with the Secretary of State annually. The list may be used by the proprietor of a business in making an informed decision before entering into a contract with a performing rights society to use music in his or her place of business. The required list must be provided at a reasonable cost to anyone requesting it. A performing rights society must also establish and maintain a toll free telephone number through which inquiries regarding specific musical works may be made. The bill requires that certain information, including information regarding the list and the toll free telephone number, be provided to a proprietor at least 72 hours before a contract for the payment of royalties is executed; and that certain information be included in the contract. Contracts must be offered for a term of one year, but the parties may agree to a contract of another duration.

      Finally, the bill prohibits certain unfair or coercive practices by performing rights societies in their dealings with proprietors and establishes penalties for violations of its provisions. The maximum penalty for a first violation is $2,500, and for subsequent violations, $10,000. The bill also establishes a private cause of action for violation of its provisions.

      Amendments to the bill include the following:

∙    removal of the definition of "area" from the bill, which was defined as a geographic region having a 25 mile radius surrounding each business location of a proprietor;

∙    provision that a performing rights society shall notify a proprietor, in writing, that upon request by the proprietor the performing rights society, before entering into a contract with that proprietor, will provide a schedule of the rates and terms of royalties under agreements executed by the performing rights society and proprietors of comparable businesses in the same county;

∙    removal of every reference of the term "nondramatic musical works" in the bill so that the bill's provisions relate to musical works in general;

∙    stipulation that the bill's provisions apply to performing rights societies licensing music in this State, rather than to performing rights societies doing business in the State, as originally stated in the bill;

∙    provision that every performing rights society licensing music in this State shall file a current list of not less than the performed copyrighted works, at least annually with the Secretary of State, rather than a current list of the copyrighted works, as originally provided in the bill, for which the performing rights society collects royalties on behalf of copyright owners;

∙    provision that a performing rights society, or any agent or employee of that society, is in violation of the bill's provisions when engaging in an act or practice that unduly disrupts a proprietor's business;

∙    provision that a proprietor, when bringing an action in a court of competent jurisdiction involving a performing rights society, may recover actual damages sustained as a result of a violation of a provision of this bill, instead of any damages so sustained, as stated in the original bill;

∙    stipulation that the provisions of the bill do not apply to contracts between performing rights societies and broadcasters licensed by the Federal Communications Commission or to any enforcement conduct by law enforcement officers or other persons pursuant to the "New Jersey Anti-Piracy Act;" and

∙    exemption from the provision in the bill that all contracts must be offered for a term of one year unless the parties agree to a contract of another duration for contracts which contain terms negotiated between a performing rights society and a bonafide national trade association representing a substantial percentage of proprietors of the same type.