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These estimates sum to $44.4 million in copyright owners' income from performance fees attributable to sound recordings, an increase of 283% over the level of 1963, as reported in the 1965 Glover Statement.

In terms of the estimated mechanical royalties, it will be noted in footnotes "a" and "b" of Exhibit 3 that there are two estimates provided. The footnotes indicate that the two estimates are from different surveys, and it explains our rules for the use of each. The lower estimate ($77 million in 1973 and $79 million in 1974) is from a lengthy financial survey which was first conducted by CRI in 1973 and later updated in 1974 and 1975. It is discussed in detail below under the notes to Exhibit 5. The higher estimate is from a short, special 34-company survey which CRI conducted in 1975 in order to obtain the most recent information on mechanical royalties paid. It was conducted as follows:

A two-question survey was sent to 96 record companies
in early 1975. The companies comprised all those member
firms of the Recording Industry Association of America
plus an approximately equal number of presumed prospective
members. Thirty-four companies responded. Those who did
not respond did so for a variety of reasons -- some were
no longer in business, others had merged or had been
acquired, and many were inactive and had no sales during
the period. When compared with RIAA industry sales esti-
mates, it appeared that the 34 respondents represented
close to 98% of industry sales -- and hence, mechanical
royalties paid. Thus the figure of $83 million for
mechanical royalties paid in 1974 is a highly reliable
number.

On the next four pages following, the memorandum introducing the short survey, the one-page questionnaire, the names of the respondent firms, and the raw survey results are provided.

128

MEMORANDUM

December 2, 1974

TO:

Record Companies

FROM: .

Cambridge Research Institute, Cambridge, Massachusetts
Telephone: (617) 492-3800

SUBJECT:

1973 and 1974 Statistics on Mechanical Fees Paid by the
U.S. Record Industry

During recent Senate hearings on the Copyright Revision Bill, questions were raised about the total amount of mechanical fees paid by the record industry. In order to illustrate the severe impact on the record industry of raising mechanical fees from 2¢ (under existing copyright law) to 3¢ (under the copyright bill passed by the Senate in September 1974), there is an urgent need to collect statistics on the mechanical fees paid by as many record companies as possible. Could you, therefore, please fill in the attached questionnaire and

return it by January 15.

The following procedure has been established so your company's financial data will be handled in a confidential manner:

After you have completed the enclosed form keep one copy
for your files and send one copy to the CPA firm of
J. K. Lasser & Company, 666 Fifth Avenue, New York,
New York 10019. (You may use the preaddressed envelope
that is enclosed. )

As you will notice, your forms have been pre-coded with
a company number known only to Cambridge Research
Institute. The CPA firm of J. K. Lasser & Company will
not know the name of your company. In this way, your
company's name will not be associated with your financial
data.

The financial data you send to the accountants will be
combined with data from other firms, which will prevent
disclosure of individual company information. Your
reporting forms will be destroyed.

57-786 0 - 76 - pt.3 - 10

129

RIAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 AND 1974

Company
Code Number

Send form to:
Ms. Millicent Hauser :
J.K. Lasser & Co.
666 Fifth Avenue
New York, N. Y. 10019

Questions may be referred to:
Mrs. Carol Cerf
Cambridge Research Institute
Telephone (617) 492-3800
Cambridge, Mass,

Only financial statistics on record and tape operations in the

United States should be supplied.

[blocks in formation]

These figures can be estimates if necessary, but please indicate if they are. PLEASE MAIL THIS INFORMATION BY JANUARY 15, 1975.

130

Record Companies which Responded to the Questionnaire Entitled

"RIAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 and 1974"

ABC/ Dunhill Records
Alshire International, Inc.
A & M Records, Inc.
Ansonia Records
Arista Records

Atlantic Recording Corp.
Bee Gee Records
Buddah Records
Capitol Records, Inc.
Challenge Records

Cinnimon, clo Goldband Records
Columbia/Records Group
Disneyland/Vista Records
Elektra / Asylum/Nonesuch Records
GNP Crescendo Records

GRT Corporation
Hickory Records, Inc.
Icka-Delick-Music & Records Corp.
'London Records
Longines-Symphonette Recording Society

MCA Records, Inc.
Mill City Records
Nashboro Records
Phonogram, Inc.
Pickwick International, Inc.

Polydor, Inc.
RCA Records
Savoy Records, Inc.
Sussex Records
20th Century Records

United Artists Music & Records Group, Inc.
Thomas J. Valentino, Inc.
Warner Bros. Records
Word Records

131

RESULTS
RIAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 AND 1974

Company - Code Number

Send form to:
Ms. Millicent Hauser
J, K, Lasser & Co.
666 Fifth Avenue
New York, N. Y. 10019

Questions may be referred to:
Mrs. Carol Cerf -
Cambridge Research Institute
Telephone (617) 492-3800
Cambridge, Mass.

Only financial statistics on record and tape operations in the

United States should be supplied.

[blocks in formation]

* These figures can be estimates if necessary, but please indicate if they are.

PLEASE MAIL THIS INFORMATION BY JANUARY 15, 1975.

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