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value of mechanical royalties paid in one year by the number of releases in the year, and to compare that figure with the corresponding value in another year. * That is done in Exhibit 4, which measures the trend in royalties per released tune as between 1963 and 1972. Royalties per released tune went from $656 to $1,399, an increase of 113%. That percentage increase is a reasonable measure of the percentage increase in mechanical royalties per tune, although the dollar income per average tune would be considerably higher because of multiple releases per tune, Accordingly, the dollars of royalties per tune were going up faster than the royalties per release of that tune, which, themselves, were going up faster than inflation.

It should be noted and emphasized that these domestic mechanical royalties constituted only part of the income received by copyright owners from recorded music. They also received sizeabie foreign nechanical royalties as Exhibits 2 and 3 make clear. In addition, their incomes from performances were about as great as the mechanical royalties and were also accruing faster than inflation.

We shall now turn to an examination of what has brought about the trenendous increases in incones of copyright owners from recorded music.

*The largest share of sechanical royalties occurs on recently released tenes, although sany releases continue to collect royaities :o: pany years.

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Note: For this Exhibit, the year 1972 was used because it was the latest

year for which the numbers and releases were available.

Statistics on releases are from 3il:board. The 1!.25 runes per 12 was calcuiated as :ollows: In :963, there were approximately 12 tunes per popular LP. CRI's survey of 13 leading record companies, with 61% of the industry's 1972 sales, indicated that, on the average in 1972, a mechanical royalty of 22.5¢ was paid for each popula: LP. With a 2ė rate, this would indicate that the average popular L? had 11.25 tunes in 1972. This overstates the number of times released, for one tune may be recorded on both a single and an L?, a practice chat was more common in 1972 Chan in 1963. Also, i ziren cine may be recorded in several dizferent versions on ?'s or siag! =s or coth. The number of times recorded is only sone irac::on vi che number of releases. The above rigures of releases do act include apes. The copyr:gnt 10 ders earn nechanical royalties Of the saies of their tunes on cape, as jeii 25 on records.) "For source of cata, see .cibit 30.

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I.

THE HIGH INCOME ENJOYED BY COPYRIGHT OWNERS (CONT'D.)

C.

THE MUSIC PUBLISHING INDUSTRY HAS NOT ONLY BEATEN INFLATION BY
A WIDE MARGIN, BUT HAS BENEFITED MORE FROM ADVANCES IN RECORDED
MUSIC THAN RECORD MAKERS WHO MAKE RECORDED MUSIC POSSIBLE AND
AVAILABLE

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Thanks to the revolution in recording technology and in
marketing techniques, sales of recordings have risen
many times over. The burgeoning sales have produced
ever growing income for music copyright owness, who have
consistently earned between 7.65 and 11.1% of record com-
pany sales -- far more than the 5% envisaged by Congress
in the 1909 law. Copyright owners benefit greatly from
the popularity of commercial use of records. The record
Bakers, whose investments and ingenuity are largely re-
sponsible for the sales growth, have earned from these
sales uncertain and sharply fluctuating profits, for this
is a high-risk industry. Record makers, who have brought the
consumer ever-better products, at a lower price than in
1909, are profiting less from the new products than the
publishing companies which have invested little or nothing
in the development of these products.

In order to reach an informed, not to say a fair judgment concerning the statutory mechanical royalty rate and whether it should be increased, one really must recognize and take under advisement some basic facts as to the nature and attraction of modern-day recorded music and the economics of the recording industry.

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Seen from our present-day perspectire, che recordings of :909 --
when Congress thought it fair that copyright owners should get as much
as ?t per recorded tune -- seem naive and quaint, both artistically
and technically. Recordings were made mechanically through an inverted
segaphone and the thin and scratchy results were physically pressed on
one side of a "wax" disc, one tune per disc. Or a nechanical reproduc-

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tion of sheet music was produced through perforations in a roll of paper. The experience of listening to such music -- miraculous in: its day, no doubt -- bears little relationship to the experience of listening to modern recorded music, popular or classical.

Recorded Music Today.

The technology of recording sound has advanced tremendously. Fidelity -- range, responsiveness, and freedom from distortion -- is only one aspect of this advance. Many and varied sound and musical effects may now be created through use of multiple nicrophones and amplifiers, and multi-channel recording tapes controlled througn intricate electronic consoles.

This advancing technology nakes extraordinary kinds and ranges of musical expression come alive through artist:y of performance, arrangements, musical concepts, and through sound as something to be experienced for itself.

A tume, alone, a configuration of musical notes indicated on a sheet of paper, makes no music, let alone a musical experience. To become music, the time at least must be hummed or picked out with one finger on a piano. A musical experience -- far beyond the tune itself -- is in large measure a matter of musical arrangement that reflects a concept. It is in very large measure a matter of the artistry, personality, and emotion of performance. In recorded music, today, the extza dimension o£ the artistry and technology of the generation and recording of sound is added, and is is often this iagredient that makes for a nemorable musical experience.

In less than a generation, the recording industry has gone from "L" to "Hi-Fi" to stereophonic co quadraphonic sound: from "microgroove' to 3-channel, frequency-screened and corrected capes.

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These facts about modern recorded music are coming to be recognized and appreciated. An article in The Wall Street Journal described "How Record Producers Use Electronic Gear to Create Big Sellers". *

Each instrument has its own microphone leading to its own
track on the big console's recording tape... [The producers]
will cut, slice, and dub tracks from the best of the musicians'
performances to eliminate flubs by one or two of them, and
they'11 pick tapes from the (singer's) performances for her
best lead vocal. For her harmony parts, they can manipulate
the tapes to make her sound like a duo, a trio, a quartet --
or even, if necessary, a 16-voice choir. They also will
add violin flourishes, called 'sweetners'. Finally, they
will blend and distill all this into two stereo record tracks.

Even a president of the American Guild of Authors and Composers has acknowledged that the popularity of tunes and songs is founded almost entirely upon successful recordings created and marketed by recording companies. He said:

Years ago a publisher bought a song, plugged it and got
it published in the eventual hope of getting a record.
Now a song is nothing without a record at the start. **

3.

Benefits From, and Contributions to Recorded Music: Recording
Companies and Publishing Companies.

Overview. In Parts A, B, and C of Exhibit 5, estimates are given
of the revenues, various outlays, and profits of the recording in-
dustry for the years 1955-1964 and 1967-1974. Several important
facts stand out anong these data:

Growth in Record Retai. Saies. Between !955 and 1974, estimated record sains 20 tail list prices rose :com :ess than $280 million to about $2.2 billion. These estimated retail sales are based on list prices, which has been one Common standard for estimating retail sales over time. Because aost recordings 119 sois at d sizeabie jiscount, how

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