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I.

THE HIGH INCOME ENJOYED BY COPYRIGHT OWNERS (Cont'd.)

B. THE INCOME PROVIDED TO THE MUSIC PUBLISHING INDUSTRY FROM RECORDINGS
HAS GROWN MUCH FASTER THAN INFLATION

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The income provided to the music publishing industry by recordings
measured in the dollar aggregate, and per recorded tune
has grown
very rapidly. It has grown faster than inflation. It has even grown
faster than "Median Family Income." Music copyright owners' income from
recordings comes not only from mechanical royalties paid by U.S. record
makers. They also get incomes from payments of mechanical royalties by
foreign record makers, including foreign companies that make, and sell,
records abroad from American-made master recordings. Copyright owners
also receive large and growing incomes from records used in radio and
television broadcasting, and in providing "background" music that is a
widely sold service.

Not only is the share of revenues from the sale of recordings that goes to publishing companies and other copyright owners much greater than originally visualized by Congress, but their dollar incomes from recordings have, in fact, increased very much faster than inflation.

1.

Inflation in the Decade 1963 and 1973

Between 1963 and 1973, the average annual Consumer Price Index, based on the year 1967, rose from 91.7 to 133.1, an increase of 45%.* In those years, Median Family Income, that level of income where 50% of American Families have more and 50% have less, and which takes into account both dollar inflation and increases in real income besides, rose from $6,265 in 1963 to $12,051 in 1973, an increase of 92%.

How did the American music publishing industry fare in comparison, as between those years? Let us examine what happened to each of the several kinds of income that copyright owners derive from recordings. The following facts are set forth in Exhibits 2 and 3.1

• See 1974 Statistical Abstract of the United States.

**The year 1973 was used in this connection, being the latest year for nich certain important iata were available. See NOTE to Exhibit 3.

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Derivation of figures is explained in Exhibit 3, Notes a and 5.

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erhan,cal Royalties from U.S. Record Makers

Between 1963 and 1973, mechanical royalties paid by U.S. record companies more than doubled from $37.6 million to $77.1 million. That is an increase of something of the order of 113%. This is to be compared to the increase of 45% in the Cost of Living Index and the increase of 95% in Median Family Income.

1 Mechanical Reyalties from Foreign Record Companies

In addition to those domestic mechanical royalties, copyright owners also receive royalties from foreign record makers. A substanfial fraction of those foreign royalties come from the use of master recordings made by U.S. recording companies in the United States and that are licensed for manufacture and distribution abroad by non-U.S. companies Foreign royalties have grown even faster than J.S. royalties Mechanical royalties received by U.S. copyright owners from record companies abroad rose from $6 9 million in 1963 to $35 mi..ion in 1974. That is an increase of 4071.

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Total mechanical royalties paid to publishing companies rose, therefore, from $44 5 million to somewhere around $115 million, say by something like 1581.

is the Publishing Industry from mercial Use of Recordings In addition to mechanical royalties from record makers, copyright owners get large and growing incomes from the use of recordings in "alud and television broadcasting and in commercially supplied 'back. ♪ad Boll These are known as performance rova.t.es

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It should be noted in passing that, unlike the music publishing industry, recording companies receive not one penny in the form of performance royalties from commercial uses of their products, as in broadcasting and "background" music.

6. Copyright Owners' Total Income from Records

Taking these several incomes together, publishing companies and others, in 1963, derived from records and their commercial use a total income amounting to $60.2 million. These kinds of incomes, in 1973, came to something like $159 million. The 1973 figure represented an increase of over 260%, as compared to the increase of 45% in the Cost of Living Index and of 92% in Median Family Income.

These are the facts as to how music publishing companies and other copyright owners fared from recorded music in comparison to inflation. 7. Increase in Royalties Per Tune

Not only have royalties to copyright owners increased faster than inflation in the aggregate, royalties per tune have also increased faster. This has occurred because of two reasons: first, because of the expansion in recording media, a new tune is often released in numerous mechanical forms -- on a 45 RPM single, as a band on an LP, on an 8-channel tape or a tape-cassette. Royalties are paid on each unit of each of these forms, many times under several different licenses. Additional paying licenses will occur if the tune is later released through a record club, or if re-recorded on a budget album. Second, if a second or third or fourth artist also performs the tune, a separate license for each release will result in further royalties for the same, original tune. Accordingly, a reasonably popular rune can be the subject of dozens and 10tens of separately licensed releases in a single year. This sumber of "releases" of a single performance has been tending to increase as the numbers and popularity of different recording media have been increasing, and with reissues, often on "budget" labels, of former favorites. One way of estimating the trend in royalties received per tune -if not the liters. tollar amounts -- is simply to divide the total dollar

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