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the impact of the "3¢ rate" on the typical li recent *** industry, an analysis was sade of the Top 50 911 ..** igazine on March 3, 1973, selected as rasdoa 11:atr.. bums contained two records, a total of 165 records ..* ined. If, for purposes of calculation, ce assant : ry rate of 24 per license and released tune was p., * * is sample would have called for a royalty of it!! ...

royalties currently paid in excess of it as a mi se minute" rate, the average sechanica! renalty pu: * tample is estimated to have been about it y royalty tha:, in contras:, would have bee 2. Melly # to this Subcommittee by the publish""Te " vs. ne or 3/4& per minute of playing time, b reit & Fur he statutory Dechanica: rovar :/ lerine sier W provisions, would have been 35€, 12 ***** * (See Exhibit 6).

Percentages of "Overtime" Over

Over 5 Minutes 4 Minutes

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*.5 ***17113 is based on the top 180 of the top 200** albums listed LSI. ** March 3, 1993. Because some albums contained to *****, * total of 165 records with 1.653 tunes were tised from the 1) auto.

s increase in the sechanical rovalsy rate seara
+ profits and revenues of the publishing 290 ****.

ly, the answer would depend upon whether ** *** ***
or year.
te data are set forth which gauge wha: ww!! **
cposed increase of sechanical rorativ rites a the oven

the past four years, 1973-1998, of m e : the standpoint of recording indus: yrat.:),

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Tint la specifi. & statutory rate of de per select love * #1 rears, record panies have general y adopt .d the practis

*64.513 , unt of Vie pe alu.. ol . ture's play!

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MUSIC PUBLISHING INDUSTRY AND RECORDING INDUSTRY, 1971-1974

Estimated Estimated increase increase, as Total

Estimated Recording
Actual in Mechanical Percent of Estimated Mech- Industry Pre-Tax Pro
Mechanical Royalties Due to Mechanical anical Royalties fit From All Sources
Royalties & Rate"
Royalties After Increase Before Increased

• Royalties

Estimated Recording Increased Mech-
Industry Pre-Tax Pro- anical Royalties
fit From All Sources as of Record
After increased

Industry Pre-Tax
Royalties

Profits From All

Sources
(s Million)

(Percent)

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$ 42.5

51.8

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1460

Increased Mechanical Royalties

of Record Industry Pre-Tax Profits from All Sources (Percent) as

try, these increased royalties would have represented not less than 38.61
of the pre-ta profits, from all sources, of the whole recording industry
u 19**) up to as much as $7.66 (in 1973). For the four-year period, includ-

the the pool years and the two bad, the increased royalties would have
a 45 51 of the entire recording industry's pre-tax profits from all sources.

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Estimated Recording
Industry Pro-Tax Pro-
fit From All Sources
After Increased
Royalties

dollat terms, the increase in royalty rates would have taken an rrug of about $46 million a year over the four year period from the PRE:1414 164TTY (a total of 1:84 aillion) and given that soney to the 28.6 p.shy ladustry. The publishing industry's "take" from sechanical

yen... 4 have been increased from an annual average of about $?! 21111on 11 e rrage of about $:::10. This would have represented an increase

****** metanical royaity income of about 391.

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* surrogate pro-tar profit of the recording industry from all sources for the fourruar per ad would have been reduced by the same $184 million,

. tipart of about $497 aillion to about $2!8 million in terms of an a miar nerage, the pre-tax profit of the recording industry would en ser fram about $:00 million to $54 million.

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se tiparts of inpact on pre-tax profits of the recording industry #oste to pro-tax profits from all sources, including foreign fees for records wie w tra V S. -nade sasters - on which foreign sechanical royalties

* 4 to $ copyright owners by foreig record companies -- together
*.1) we r e tadio rentals, interest, etc.. This impact could also be
IUFTtpro-tax profits on records made and void in the United States,

* ;* . to se records that doestic sechanica. royalties relate.
9, "pares, 80m 11!..mu+ :14: :par: 106 wit! k ua:

a you.. st . laro' ina : ova...s 14€ :su. la..

($ Million)

$122.9

124 2

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Exhibit 8

MIUNILAL ROYALTIES COMPARED TO RECORDING INI USTKY PRE - TAX PROF ITS

Phu tu CORDS MADE AND SOLD IN THE UNITED STATES, 1971-1974

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l routes on records made and sold in foreign countries.

1403

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proposed "Se Rate", including the increase, would have averaged 3156 of those
p*-prafsts. This would compare to the actual royalties at the "2¢ Rate".

1., n fact, averaged 1991 of the pre-tax profits of the recording industry
mmmardi aade and so:4 in the United States.

Mechanical Royalties
on 'Those Records at
Proposed "3$ Rate".

1 ster words, whereas mechanical royalties were about twice the profits w! tans with recording csepanies derived from records sade and sold in 1 st Statos, the royaities under the "3¢ Rate" would be over three tises Tu te prutar profits.

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ta the fupepring paragraphs, we have been speaking of the recording ko many as wie One can assume -- correctly - mat some record manors ens sont

p l . than semers. The impact of the increased sechanica: 2.1.1 sveragely profitable recording companies would have been stagger. 4 * average of 441 of their pre-tax prof::. fra a!! sources over a ! pour per: For « less profitable fin, the ispast wou! 4 have been

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Et it at FN 11 t . nere penny increase, but transfer of a 1 annt of money for ne industry is another. Siven, as we have seen, * **.4'. *r: :ons at the two industries to recorded music, and the 1.41..hee!!** **r derire respectively or recorded music, this trang. Proud m or, rearned windtail for the one and a sajor - stagror.

* ble for other

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