Exhibit 5 cont. Survey - 2 155 Part B: Wholesale Prices, Titles Released, Units Sold, Number of Employees Exhibit 5 cont. PART IV CONSOLIDATED INCOME STATEMENT OF RECORDING COMPANIES SURVEYED BY CRI IN 1965 The estimate of the of industry sales represented by the surveyed companies was based on excise taxes paid by these companies in 1955-1963. Totals do not always add precisely because of rounding. The figures here are only for the U.S. operations of the record companies surveyed. Figures for their foreign subsidiaries are not included. CRI's 1965 survey of leading record companies. For results in more detail see Exhibit 5. The statistics here are the sum of the figures reported by the surveyed companies and do not include any estimates for the multitude of companies not in the survey. Exhibit 5, cont. PART IV CONSOLIDATED INCOME STATEMENT OF RECORDING COMPANIES SURVEYED BY CRI in 1972, 1973, and 1974 Estimates of the of industry sales represented by the surveyed companies are based on the assumption that industry sales are about half retail sales at list prices as reported by Billboard. This assumption is supported by the prices the surveyed companies reported charging for their various types of recordings. See Exhibit 2. Note: Totals do not always add precisely because of rounding. The figures here are only for the U.S. operations of the record companies surveyed. Source: CRI's 1973, 1974, and 1975 surveys of leading record companies. For results in more detail see Exhibit 2. The statistics here are the This exhibit, together with the discussion on pages 56 and 57 is fairly self-explanatory. Nevertheless, it is.important that the derivation of the 59% figure be completely understood. The calculation is based on a sample of the top 150 of the "Top 200" LP albums from Billboard, March 3, 1973; these albums accounted for 165 LP records (because some albums contained two records) and 1,653 tunes. The number of tunes per record was counted, and playing times were measured, tune by tune. This, clearly is not a sample of all recordings. Tapes and singles were excluded. There would be some releases on singles which did not appear on LP's, but there would be virtually no tape releases which did did not come out on LP's or singles. Probably, the top 150 would be representative of the majority of U.S. sales, but they are not statistically representative of total U.S. releases or sales. For purposes of calculation, it was assumed that each of the tunes in the top 150 was at the 2¢ statutory mechanical royalty rate. In fact, some may have been at a higher rate, some at a lower rate; and there could have been included some public domain tunes at 0¢. Most likely, there was little or no public domain material included; it does not "sell." In addition, the current general (but not universal) practice of paying an additional royalty of 1/2¢ per minute of playing time over five minutes was included in the calculation of 22¢ as the average mechanical royalty per record under the present law and present practice. That would take care of the tunes that were over 24. There was then calculated what the mechanical royalty would be under H.R. 2223, tune by tune, applying the proposed statutory provisions to the data on tunes per record and on playing times. The result of this calculation was an average mechanical royalty of 35¢ per record. Whether or not any of The increase from 224 to 35¢ is 59%, as reported. the tunes in the sample actually were licensed at less than 24, as some 158 |