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COPYRIGHT LAW REVISION

THURSDAY, SEPTEMBER 11, 1975

HorsE OF REPRESENTATIVES,
SI DUMITTI ON ('OUTS, CIVIL LIBERTIES,

AND THE IDMNISTRATION OF JUSTICE
OF THE COMMITTEE ON TUE JUDICI

While Trilogifter met. purwant to repons, at 10:07 am ... Rasburn House Office Bulding, Hon. George E.

Provit Representatives Danielson, Drinan, Pattion and 1:w) poprint : Herbert Fuchs, counl; and Thom. E. .

Yo D enix. The hour of 10 o'clock having arrived, ri .", "will order.

1 o

, first of all, for being 7 minutes late here. I: ipon! hp organization, and we meet on Thuis.nl 11,'jaloshit lierom learlier.

T..smpare t ing once more on the contrarle la . Las leaning will runte principally to ilion 1! • 1 sospes propo-rd ineren in the meland .:

b op polworlornap for making and distrution

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TESTIMONY OP STANLEY M GORTIKOV, PRESIDENT. BI INDUSTRY ASSOCIATION OF AMERICA. INC. ACCOMP. JAXES Y FITZPATRICK

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Mr. DANIELSOx. Without objection, the statement will be entered.
It is not this one?
Mr. GORTikov. No, sir, it is another one.

Mr. DANIELSON. All right. It will be entered in the record, without objection, and would you please summarize!

[The prepared statement of Stanley M. Gortikov follows:] STATEMENT OF STANLEY V. GORTIKOV, PRESIDENT, RECORDING INDUSTRY

ASSOCIATION OF AMERICA, Ixc..

INTRODI'CTION

My name is Stanler Gortikor. I am president of the Recording Industry Association of America. Our member companies create and market about 83 of the recorded music sold in the United States. I have firsthand knowledge of the collimercial and creative aspects of the recording industry, having previously served as president of Capitol Records, a major recording company.

THE PROPOSED CHASOE IS EX( ESSIVE

We strongly object to the proposed "echanical Royalty" rate increase in Section 117. The "Mechanical Royalty" is the amount a music publishing company can charge a recording company for use of a composer's tune in a sound recording

Section 115 proposes a statutory increase in the mechanical royalty from 2€ to 3e. This increase is glossed over as "only a penny" increase. However, that seemingly innocions "penny" involves added payments of about $17 million per year to the music publishing industry. an increase of 39.

The $47 million "penny" payment is the biggest money issue in this bill and the major commercial and consumer question before this committee. It is:

More than 11 times greater than the $1.0 million annual payment by jukebores provided for in Section 116.

More than 7 times greater than cable television's hotly-contested payments to broadcasters of $0.7 million per year,

Almost 5 times greater than the esti.nated $10 million for performance royalties to recording vocalists, musicians, and record comjules.

More than twice all of those payments combined.

AX INCREASE IS NOT JUSTIFIED

The economic facts, detailed by Dr. John Glorer and the ('ambridge Research Institute, show there is no reason for an increase. Minnie publishers and conpowers are doing handsomely at the present rate. Their income from mechanical renities has more than louble in the print 10 years beau of increase Niles, which more than oflts intation

Ninninenntir, in the 10 year debate orer (ops right Revision, (up to today, at least the publishers have not prented any data on their profits which would justify an increase. Yet, with no such wupwartive documentation to date, they ask for an additional $ 17 million j**year.

That proposed *penny* increase in itself is inflationary and will stick the public with an increase in rod prices of almost $10 million per year. That 1*ions in repim punitive both to our industry and to the consumer. It will im.

***p har burtlens on small fledgline rrurd eumpanies. It could further dis cutirage the alreads risky business of recording chair, jazz, and experimental m je* all intrtant rutiral vintributions of sound rundings

Normater, the public interest is being well wried at the present rate There is no matofal on m ir, and plenty of music in available to the public And 111***p originnilr were the muntar ('olikreslonal objectiles in tablishing the conpulving licensing system, and the 2e rate

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The wie man of the publishing industri bollu tonn to the statement that a 26 rute established in 16) (unt. ****ihly be adeate in 1973. and that *only

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#.#2!! It fra en ls Invalred However, as we shall demonstrate, t *, fruit, what it was in 11

My arronding company arrange for an artist to ne m.,,. the trud eummary that pay the music publi-1.11 - HOT a tekinten rusalt, * fur piery remind old, and this .. . sorgt statute in 15 at 2e This royalty was enlles! IN

' *'p of the reponding art nt that time utilize "me 1.4

R.11110 pull or a ottime Edison Haxlinder. So 2 PE!and te turse (utpriseda reyurdunk Nowe med 1.fr Dext mo fred into a one sided dink still with 2

INTRODIT TIOS

Vesped therhangrennfrh benefited publishing companies an

with no additional risk or fort b) 114mm e t sin the two-de 10*• RPM dink which are the pul ::1.1

40, tot e. from the sale of one tyd In 1. fleunyi utis playing album was develop bep din l'ublishing outpaties and cou r eurned to

Ir name is Stanler Gortikor. I am prejulet! of the Home of'. ation of America. Our member companies (teatrad 2:7',' rded music sold in the l'nited States I hate Dr !" ro' ial and creative aspects of the recording inde ..3: * .* esident of Capitol Records, a major ryurdirgan

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,.

it' 1 .'') and ri-konfetal of terurdink and istet

p rah tajecirtridge and antte 'Ibeke (reated at Bhararte ut , of total resurd sa p each earing .rar.d xxl.

f r

THE PROPOSED (HLAVU! 1* !***

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strongls object to the proposed "Vertat al R 12'1 *g* in 115. The "Mechanical Royalty" is the alle dink ;. an charge a recording company for tip of 1*;**

ing

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ion 115 proposes a statutory increase in the Dreagoing my
This increase is glad over as only a fi's Epis

lr innocuous "pennr" in rolips added pal!! " , fi
the music publishing industry an innom
17 million penns" parment in the lim!! sep 1989.
for commercial and conser qepaling before or
than 11 times greater than the $10 11 312 m .

for in Section 116. than 7 times greater than cable talented :. 'Diogen er asters of $6.7 million per trar 5 times gruuter th:1n the pull.m n ! $11). '11 fever gone ! ording vocalists, musicians and mindr an twice all of those piments attured

A.X INCREASIN TOT I 17:37

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omic facts, detailed br Dr Juhe ("pr
huir there is no reavin for an
doing handwiely at the protot rip To

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* more than doubial in the past leirat. '*

e
han offset inflation
'ir, in the 10 sear delete otro e Reus
Iblishers have not promila ari atau 12,
("rease. Yet, #1th m such film por
litirnal &17 million per trar

pl"penny" increase in iturflo 14,
n increase in mund prin far?

* punitire with for ur in 'n ard "
rdenon all fail! #s an
mpadr riek bus ** nt mortali,

rtant ruitnral (nb!rihy 18 of wis, of me
s publle interpella torre Ne!! pingin
on mir, and plenty of all le

v
uere the maius (mmet, ide! omop :
WINR Jarm, and the main
O rari 411 * MY AL 1**/*• ** OWNTS.

16 .4 ,, olla puhlj.): 11.4447h to

A GROSS INEQUITY

When this Subcommittee heard testimony on this issue a decade ago, it re. jected the publishers' request for a 3€ rate. At that time it reported out Section 115 with a 25% rate increase to 212¢ per tune and 12€ per minute of playing time. Although the recording industry vigorously opposed that increase, the Revision Bill in that form passed the House in 1967.

The bill remained in the Senate with a 242¢ rate for more than seven years. Last year, without any hearings receiving additional economic evidence, the Senate Judiciary Committee raised the rate to 3€ per tune, adding a new da maging provision for 24¢ per minute of playing time. This action was taken upon the music publisher's request for an alleged "inflation adjustment". an argu. ment which was, at best, spurious and, at worst, blatantly misleading.

CONCLUSION There is no economic justification today, just as there was no justification in 1966 when this Subcommittee last considered this bill, for a 3e mechanical rate. Indeed, hard. cold, economic facts demonstrate irrebuttably that the 24 rate is still fully adequate today. Since the public is now being well-serred, and since economic facts do not justify any increase, we urge that Section 115 be amended to provide for a continuation of the present 2e rate.

Further supporting data is detailed by Dr. John Glover of the Cambridge Research Institute and the Harvard Graduate School of Business Administration.

ADDENDUM Data dereloped by the Recording Industry Association of America indicate that 34.4% of total album unit sales consist of club, mail order, premium and budget record sales. Jiore specifically, the RIAA estimates the following mix of unit sales for 1974:

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KE: RIAA SUPPORT FOX JI'STICE DEPARTMENT ANIIPIRACY AMENDMENTS

RIAA strongly supports the proposed antipiracy amendments set forth in the testimony of the Department of Justice before this committee on Jass, 1973 We detail our comments on these various proposals below.

The inent important amendment maken irtain that the copyright revision bill do not prompt the law of 30 states which provide antipiracy protection for pre 1:72 013)<! per ordini The recording industry would seriously have to cutmitler oppmnilig any revinion legim? afin which would unjustifiably deny states this f***ital w ramın against rampant rPurd pirac)

1. momitment to mortion 3411b) to confir13 the ralıdily of state antipirov 1qu* (obic*** grantel feleral right protection to sund vorlinks til all or after February 13, 1973. PL. 140). The protection for their sted! Torfure Fibruary 13, 1971 left to the state* The Supreme ('ourt ha confirised that states hate the authority to enact antipiracy law for wound rear links i***prior to Februari 13 1972 and that these teords are not in the public dans:1:n" (juldalein (alilunio. 4121816 (1973)

'urtant to this authority, intentar provide protection for and recording is del print to bebruary 1.7. 1972. Sintes with antipiracy statutes in clude:

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Indiana
Tebraska

l'enn
wa
Vpiada

SO hentucky

New llampshire Siti 1 ) aria New Mexico

letine Maryland

.* York
M busetts North (arolina (tarki
Mithr so

Ohneten
Oregon

Wa !'. in frir **.117" there are judicial desisjons that the st Tur titjeva prohibits resurd pracy: Mchikan, M

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A GROSS INEQUITY When this Subcommittee heard testimony on this imbe jected the publishers' request for a 36 rate. At tha: '3+ !

s 115 with a 25%c rate increase to ?!,6 per tune and be pa?).

" ime. Although the recording industry rigoronely Rerision Bill in that form passed the House in 1

The bill remained in the Senate with a 2',¢ rate for the ast year, without any hearings thepiring addinita m enate Judiciary Committee raised the rule tv 3€ pertur" : ig provision for per minute of playing time. This n e music publisher's request for an alleged "1.f3'tes!.. ant which was, at best, spurious and, at worst, blatably the most

(081I'NION There is no economic justification todar, jout as the tra 3 6 when this Subcommittee last considered this hill for all!-".

pri ed, hard, cold, economic facts demonstrate imati

More. fullr adequate todar. Since the public is now Hope &

::: omic facts do not justify ans incrrave, sp lirer 11 a!

rafr ovide for a continuation of the present

, rther supporting data is detailed br Dr Jatin Grupa arch Institute and the Harvard Graduate School of Biolo

mogla allylling for pre February 15, 1972 wind recordings ...or the year 2. imfnart then I turn that sertion 30)1 of the but

ny", 1.0-90 of state lans, top clarited so that no one could .. . wles llenan eusing state antipirar las I deal' betruary 1, 1913 We strongis 2011 mart the ju

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APDF DEM a developed br the Recording Industry Anes'le olete 1440 of total album unit sales consist of club ki, b

record sales. More specifically, the RIAA patitla'ns ! !.. les for 1974:

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ADDENDUM TO STATEMENTINN:19:21 V 1, "X"

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RIAA SUPPORT FOR JINTICE DEPARTMI VI AV7.itamin

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unele supports the prowned an'INTS. I mode, ľ the Department of Je'l, y fuente 1 1 . Ir comments on thirrip in profurante important a mrmral társitul

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