value of mechanical royalties paid in one year by the number of releases
in the year, and to compare that figure with the corresponding value in
another year. That is done in Exhibit 4, which measures the trend in
rovalties per released tune as between 1963 and 1972. Royalties per
released tune went from $656 to $1,399, an increase of 1131. That per-
centage increase is a reasonable measure of the percentage increase in
mechanical royalties per tune, although the dollar income per average
tume would be considerably higher because of multiple releases per tune.
Accordingly, the dollars of royalties per tune were going up faster than
the royalties per release of that tune, which, themselves, were going up
faster than inflation.

It should be noted and emphasized that these domestic mechanical
reva.t.es constituted only part of the income received by copyright
owners from recorded music. They also received sizeable foreign sech-
ah.ca. royalties as Exhibits 2 and 3 make clear. In addition, their
incomes from performances were about as great as the mechanical royalties
and were also accruing faster than inflation.

We shall now turn to an examination of what has brought about the tremendous increases in incomes of copyright owners from recorded music.

42

Note: For this Exhibit, the year 1972 was used because it was the latest year for which the numbers and releases were available.

Statistics on releases are from 311 board.

The 1.25 tunes per 2 was calculated is follows In 1963, there were spprox-
imately 12 tunes per popular LP. CRI's survey of 13 leading record companies,
with 611 of the industry's 1972 sales, indicated that, on the average in 1972,
a mechanical rovelty of 22.54 was paid for each popular LP With a 2 rate,
this would indicate that the average popular ? had 11.25 tunes in 1972.
Geis overstates the higher of times re.based, for me tune may he recorded
on both a single and in -? a practice that was more common in 1972 than in
1963. 4:30 afient me say be recorded a several different versions on 2's
.r coti. The numrer of times recorded is only some fraction of the
The apore figures of releases o ct include tapes.
declanica. vi.ties from the sales of their tunes on

43

I THE HIGH INCOME ENJOYED BY COPYRIGHT OWNERS (CONT'D.)

C. THE MUSIC PUBLISHING INDUSTRY HAS NOT ONLY BEATEN INFLATION BY
A WIDE MARGIN, BUT HAS BENEFITED MORE FROM ADVANCES IN RECORDED
MUSIC THAN RECORD MAKERS WHO MAKE RECORDED MUSIC POSSIBLE AND
AVAILABLE

In order to reach an informed, not to say a fair judgment concerning the statutory mechanical royalty rate and whether it should be increased, one really must recognize and take under advisement some basic facts as to The tature and attraction of modern-day recorded music and the economics of the recording industry

Teen from our present-day perspecti •, the recordings of 1959 -. when Congress thought it fair that copyright owners should get as much sa le per recorded "une -- seen naive and quaint, both artistically and toita..y Recordings were made mechanically through an inverted begaphone and the this and scratchy results were physically pressed 25 "var" fisc, me tune her disc. or a mechanical reprobate

44

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

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
Bakers. They also get incomes from payments of mechanical royalties by
foreign record makers, including foreign companies that make, and se!!,
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 ausic 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 501 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 921.

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 and 3.**

• See 1974 Statistical Abstract of the hited States.

** The year 1973 was used a this connection, being the latest
«nica certain „sportant lata «ere ival.30.9. jee ′′E ca Ixhait 1.

ear for

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