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117

Conclusion

To sum up: We have looked at over 1,300 tunes licensed for regular price records released to the trade by 2 prominent record companies over the better part of 1974 and more than 1,200 other licensed tunes .on budget albums, all · as set forth in Exhibit 21. From this exhibit we see the following:

More than 99% of all licensed royalty rates were at the
statutory rate or at generally available, standard
variations therefrom. Only 15 rates or 0.6% of those
licensed have been characterized as other than standard
variations from the statutory rate.

For regular price singles, the 2¢ statutory rate is
essentially the rate,

For regular price LP albums, the 2¢ statutory rate was
payable for more than 80% of the licensed tunes, and the
rates above and below 24 represented generally available
standard variants from the statutory rate.
For other than regular price records, including both budget
label product released to the trade and "Club" records,
royalty rates below 2¢ are the norm and all but a few rates
are at standard variations from the regular commercial

.

rates,

In short, just as we showed 10 years ago, the statutory rate of 2¢ and standard, generally available, non-discriminatory variations therefron account for the overwhelming bulk of all rates paid (exclusive of public domain material). The statutory rate, flatly contrary to the arguments of the publishing companies, is not "merely a ceiling". The statutory rate and standard variations are overwhelmingyly the norm. There is not, and has not been any significant amount of "bargaining" or real negotiation about these rates. Nor would there be in the future under any higher rate. Any statutory rate would become the norm. The outcome and the effects of a higher rate can be forecast with confidence.

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Rates other than standard lid or ¢ intervals or percentage thereof.
Source: Two major record companies having an estimated unit sales volumo in 1974

of 50 million records.

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119

TECHNICAL APPENDIX

TO THE
STATEMENT OF JOHN DESMOND GLOVER

ON
H.R. 2223, SECTION 115

BEFORE
SUBCOMMITTEE ON
COURTS, CIVIL LIBERTIES,
AND THE ADMINISTRATION OF JUSTICE

OF THE COMMITTEE ON THE JUDICIARY
UNITED STATES HOUSE OF REPRESENTATIVES
NINETY-FOURTH CONGRESS, FIRST SESSION

September 11, 1975

120

PREFACE

This Technical Appendix explains, supports and amplifies the data contained in the "Statement on Sec. 115 of H.R. 2223 of John Desmond Glover, Director, Cambridge Research Institute" before the Subcommittee on Courts, Civil Liberties, and the Administration of Justrice of the Committee on the Judiciary, U.S. House of Representatives, September 11, 1975. The statement was based upon a study of economic effects of proposed changes in provisions of the copyright law relating to the licensing of copyrighted music for recordings. This was the second such study conducted in ten years. .

The material that follows is organized into two main sections. The first section supports exhibits in the Summary Statement (pages 1 to 31 herein) presented orally by Dr. Glover to the Subcommittee. References are provided to specific sections of the full statement which explain the conclusions stated in the Summary exhibits. The second section supports exhibits in the full statement, as needed.

121

CONTENTS OF TECHNICAL APPENDIX

(organized by exhibit supported)

SUMMARY EXHIBITS

Page

123

123

123

123

123

A. No Economic Justification for an increase .
B. Price Per Tune is Down; Copyright Owners' Share is Up

Mechanical Royalties Have More Than Doubled
D. Mechanical Royalties Outpace Inflation and Median Family Income,

1963-1973
E. Mechanical Royalties Paid Per Released Tune Outpace Inflation

and Median Family Income, 1963-1972

Payments to Copyright Owners Would Go Up $47 Million
G. Annual Cost to Consumers Could Go Up By $100 Million
H. Breakeven Point Higher Than Ever
1. Rates Paid are Statutory Rate and Standard Variations
J. In 1974 as in 1963 Tunes were Licensed at 24 or Standard

Variations

124

124

124

124

124

k. No Economic Justification for an Increase

125

FULL STATEMENT EXHIBITS

126

1. STATUTORY LICENSE ROYALTIES AND RECORD COMPANY PRICE: 1909 vs. 126

1974 2 & 3. INCOME TO COPYRIGHT OWNERS FROM RECORDINGS, 1973 vs. 1963

STATUTORY MECHANICAL ROYALTIES PAID PER RELEASE OF RECORDED TUNES: 132

1963 vs. 1972 5. ESTIMATED FINANCIAL STATISTICS AND INCOME STATEMENT FOR THE U.S. 132

RECORDING INDUSTRY. 1955-1974 6. STATUTORY LICENSE ROYALTIES PER TOP 150 LP ALBUMS IN 1973 AT VARIOUS 158

STATUTORY RATES

159

FINANCIAL IMPACTS OF PROPOSED INCREASED MECHANICAL ROYALTIES ON
MUSIC PUBLISHING INDUSTRY AND RECORDING INDUSTRY, 1971-1974

160

MECHANICAL ROYALTIES COMPARED TO RECORDING INDUSTRY PRE-TAX
PROFITS FROM RECORDS MADE AND SOLD IN THE UNITED STATES, 1971-1974

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