Rates on "Club" Records

Finally, there is the second category of non-regular price albums which are sold either to record clubs or to non-music organizations for use as premiums, and which provide additional opportunities for incremental revenues to copyright owners. In the 1974 periods the two record companies released 98 of these so-called "Club albums", all at lower than regular prices. These 98 &bums contained 1,052 licensed tunes. For these club album tunes, a standard pattern of discounts is very apparent. In 948 or 90.11 of the licensed tunes. IM INSALIX, JA19 ÅR 258 of the regular commercial rate for that tuns, in # „ostances, 7 41 of the total, no discount at all occurs from the regular mert.al rate for the tune In only 15 instances did discounts of other

that the standard 251 occur.

It should be noted that the regular commercial rate from which the club rate is calculated is not always 24. It is 24 for more than 80% of the tunes, but in the remaining cases the regular rate is either above or below 24. The jearn of the discounts from the regular rate is set forth, record by

Pecure, in Exhibit 20, on pages 82-83.

Three other characteristics of the rate pattern can be cited.

• First, in all cases where the regular rate was greater
than 24, the club rate was 751 of the commercial rate.
Second, in 820 of the 841 instances where the commercial
rate was 24, the discount was exactly 251. of the other
21 cases, no discount was granted on 17 tunes, and a 50%
discount was granted on the other 4 tunes.

Third, where the regular commercial rate was less than
24, there tended to be less than the standard 251 discount
from the commercial rate. For example, of the 52 instances
where the commercial rate was le, only 5 tunes were granted
the special 251 club discount, there was no club discount
granted for the other 4" tunes.

his concludes the presentation of rate data

114

To sum up: We have looked at over 1,300 tunes licensed for regular price records released to the trade by 2 prominent record companies over the better part of 1974 and more than 1,200 other licensed tunes on budget albums, all as set forth in Exhibit 21. From this exhibit we see the following:

More than 99% of all licensed royalty rates were at the

statutory rate or at generally available, standard
variations therefrom. Only 15 rates or 0.6% of those
licensed have been characterized as other than standard
variations from the statutory rate.

For regular price singles, the 24 statutory rate is
essentially the rate.

For regular price LP albums, the 24 statutory rate was
payable for more than 80% of the licensed tunes, and the
rates above and below 2e represented generally available
standard variants from the statutory rate.

For other than regular price records, including both budget
label product released to the trade and "Club" records,
royalty rates below 2e are the norm and all but a few rates
are at standard variations from the regular commercial

rates.

In short, just as we showed 10 years ago, the statutory rate of 24 and standard, generally available, non-discriminatory variations there from account for the overwhelming bulk of all rates paid (exclusive of public domain material). The statutory rate, flatly contrary to the arguments of the publishing companies, is not "merely a ceiling". The statutory rate and standard variations are overwhelmingyly the norm. There is not, and has not been any significant amount of "bargaining" or real negotiation about these rates. Nor would there be in the future under any higher rate. Any statutory rate would become the norm. The outcome and the effects of a higher rate can be forecast with confidence.

hates other than standard be or be intervals or percentage thereof

Source Two mator record companies having an estimated unit sales volume in 1974

of 10 million records