This analysis is based on the Top 150 of the "Top 200" LP albums listed in Billboard on March 3, 1973. Because some albums contained two records, a total of 165 records with 1,653 tunes were timed from the 1973 hits.

The 1909 copyright law specifies a statutory rate of 2¢ per selection
but in recent years, record companies have generally adopted the practice
of paying an additional amount of 1/2¢ per minute of a tune's playing
time over five minutes. This practice was taken into account in cal-
culating the average of 22: per record.

The rate specified in A.R. 2512, passed by the House of Representatives in 1967, was 2-1/2 per tune or 1/24 per minute of playing time, whichever is larger; hence, with this rate, an additional amount over 2-1/2c would be paid for any tune with a playing time over five minutes.

The rate specified in S. 22 and H.R. 2213, the oils currently before the Congress, is le per tune or 1/4 per minute of playing time, nicaever s larger; hence, with this rate, an auditional amount over Je would be paid for any tune with a playing time over four minutes.

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try, these increased royalties would have represented not less than 38.61 of the pre-tax profits, from all sources, of the whole recording industry in 1974) up to as much as 57.68 (in 1973). For the four-year period, including the two good years and the two bad, the increased royalties would have taim 45 51 of the entire recording industry's pre-tax profits from all sources. In dollar terms, the increase in royalty rates would have taken an average of about $46 million a year over the four-year period from the recording industry (a total of $184 million) and given that money to the music publishing industry. The publishing industry's "take" from mechanical royalties would have been increased from an annual average of about $78 million to an average of about $124 million. This would have represented an increase „n average mechanical royalty income of about 591.

The aggregate pre-tax profit of the recording industry from all sources for the four-year per.od would have been reduced by the same $184 million, from a figure of about $402 million to about $218 million. In terms of an amual dollar average, the pre-tax profit of the recording industry would have been reduced from about $100 million to $54 million.

Those figures of impact on pre-tax profits of the recording industry relate to pre-tax profits from all sources, including foreign fees for records made abroad from U S.-made masters on which foreign mechanical royalties were paid to US copyright owners by foreign record companies -- together with uncome from studio rentals, interest, etc.. This impact could also be impared to pre-tax profits on records made and sold in the United States, aure it is to these records that domestic mechanical royalties relate. *. ang figures, shown in fallibit 2, mas that comparison with actual afik. "va.?.es at the 2 late" and with the nova.t.es that could have "Je Rate

Exhibit 8

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proposed “Se Rate", including the increase, would have averaged 315% of those pre-tax profits. This would compare to the actual royalties at the "2¢ Rate", which, in fact, averaged 1981 of the pre-tax profits of the recording industry on records made and sold in the United States.

In other words, whereas mechanical royalties were about twice the profits before taxes which recording companies derived from records made and sold in the United States, the royalties under the "34 Rate" would be over three times those pre-tax profits.

in the foregoing paragraphs, we have been speaking of the recording „Joustry as a whole One can assume correctly that some record makers are pore profitable than others. The impact of the increased mechanical r-a,tues in averagely profitable recording companies would have been stagger14 - an average of 461 of their pre-tax profits from all sources over a four year period For a less profitable firm, the impact would have been

at issue is not a mere penny increase, but a transfer of a kunt of money from one industry to another. Given, as we have seen, the relative contributions of the two industries to recorded music, and the financial benefits they derive respectively from recorded music, this transfer would be a majer, unearned windfall for the one and a major -- a staggerburien for the other

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