Page:Copyright Law Revision (Senate Report No. 94-473).djvu/81

 rates in the bill might be too high and thus handicap the development of the cable television industry. The committee believes that the economic data available at the present time is inconclusive but supports the Congress initially establishing royalty rates, as is also provided under Sections 115 and 116.

Cable systems are commercial enterprises who operations are based upon the carriage of copyrighted program material for the use of which no royalties are currently being paid by cable operators to the creators of such programs. The committee has considered at length various proposals to exempt certain categories of cable systems from the payment of copyright royalties. The committee continues to believe that the decision taken by the Senate last year to require some payment by every cable system is sound. The committee believes that basing the royalty fee on the gross receipts of a cable system is far preferable to alternative proposals that would require complex determinations as to Whether a particular signal should be classified as “local” or “distant.”

The committee has taken note of the impact of copyright payments on smaller systems. Accordingly, the committee cut in half the royalty schedule adopted by the subcommittee last year. The modest copyright payments to be made by small systems will be a minor element of their operating expenses and in the opinion of the committee will not retard the orderly development of the cable television industry or the services it provides to its subscribers.

The bill provides the following graduated fee schedule:
 * (i) ½ percent of any gross receipts up to $40,000;
 * (ii) 1 percent of any gross receipts totalling more than $40,000 but not more than $80,000;
 * (iii) 1½ percent of any gross receipts totalling more than $80,000, but not more than $120,000;
 * (iv) 2 percent of any gross receipts totalling more than $120,000, but not more than $160,000; and
 * (v) 2½ percent of any gross receipts totalling more than $160,000.

The total royalty fee shall be determined on the basis of a cable system’s gross receipts from its subscribers for the basic service of providing secondary transmissions. Income received from the installation of equipment or from advertising accompanying CATV-originated program is excluded from the computation of the gross receipts of a cable system.