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119

TECHNICAL APPENDIX

TO THE
STATEMENT OF JOHN DESMOND GLOVER

ON
H.R. 2223, SECTION 115

BEFORE
SUBCOMMITTEE ON
COURTS, CIVIL LIBERTIES,
AND THE ADMINISTRATICS OF JUSTICE

OF THE COIMITTEE ON THE JUDICIARY
UNITED STATES HOUSE OF REPRLSENTATIVES
NINETY-FOURTH CONGRESS, FIRST SESSION

September 11, 1995

120

PREFACE

This Technical Appendix explains, supports and amplifies the data contained in the "Statement on Sec. 115 of H.R. 2223 of John Desmond Glover, Director, Cambridge Research Institute" before the Subcommittee on Courts, Civil Liberties, and the Administration of Justrice of the Committee on the Judiciary, U.S. House of Representatives, September 11, 1975. The statenent was based upon a study of economic effects of proposed changes in provisions of the copyright law relating to the licensing of copyrighted music for recordings. This was the second such study conducted in ten years.

The material that follows is organized into two main sections. The first section supports exhibits in the Summa ry Statement (pages 1 to 31 herein) presented orally by Dr. Glover to the Subcommittee. References are provided to specific sections of the full statement which explain the conclusions stated in the Summary exhibits. The second section supports exhibits in the full statement, as needed.

121

CONTENTS OF TECHNICAL APPENDIX

(organized by exhibit supported)

SUMMARY EXHIBITS

Page

123

123

123

123

123

A. No Economic Justification for an Increase

Price Per Tune is Down; Copyright Owners' Share is Up
Mechanical Royalties Have More Than Doubled
Mechanical Royalties Outpace Inflation and Median Family Income,

1963-1973
E. Mechanical Royalties Paid Per Released Tune Outpace Inflation

and Median Family Income, 1963-1972
F. Payments to Copyright Owners Would Go Up $47 Million
G. Annual Cost to Consumers Could Go Up By $100 Million
H. Breakeven Point Higher Than Ever

Rates Paid are Statutory Rate and Standard Variations
J. In 1974 as in 1963 Tunes were Licensed at 24 or Standard

Variations
K. No Economic Justification for an increase

124

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124

I.

124

124

125

FULL STATEMENT EXHIBITS

126

126

1. STATUTORY LICENSE ROYALTIES AND RECORD COMPANY PRICE: 1909 vs.

1974
2 & 3. INCOME TO COPYRIGHT OWNERS FROM RECORDINGS, 1973 vs. 1963
4. STATUTORY MECHANICAL ROYALTIES PAID PER RELEASE OF RECORDED TUNES:

1963 vs. 1972
ESTIMATED FINANCIAL STATISTICS AND INCOME STATEMENT FOR THE U.S.
RECORDING INDUSTRY1955-1974

132

132

8.

STATUTORY LICENSE ROYALTIES PER TOP 150 LP ALBUMS IN 1973 AT VARIOUS 158

STATUTORY RATES
FINANCIAL IMPACTS OF PROPOSED INCREASED MECHANICAL ROYALTIES ON 159

MUSIC PUBLISHING INDUSTRY AND RECORDING INDUSTRY, 1971-1974
MECHANICAL ROYALTIES COMPARED TO RECORDING INDUSTRY PRE- TAX

160 PROFITS FROM RECORDS MADE AND SOLD IN THE UNITED STATES, 1971-1974

DS MADE AND SOLD IN THE UNITED STATES. 1971-1974
IMPACT OF A COPYRIGHT ROYALTY INCREASE ON CONSUMER PRICE

160 COST TO CONSUMERS OF A 3¢ STATUTORY LICENSE RATE

161

9.

10.

122

Page 161

161

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11. IMPACT OF A COPYRIGHT FEE INCREASE ON JUKEBOX OWNERS
12. TUNES AND PLAYING TIME OF TOP 150 LP ALBUM RECORDS
13. RECORD MAKERS UNIT SALES PER RELEASE AND BREA KEVEN POINTS (1972)
14. RECORD RETURNS, 1969-1974
15. CONCENTRATION IN THE PHONOGRAPH RECORD INDUSTRY 1947-1970
16. DISTRIBUTION OF ROYALTY RATES PAID ON COPYRIGHTS
to BY TYPE OF RECORD ON RECORDS RELEASED BY TWO

COMPANIES IN 1974 PERIODS

163

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163

123

SUMIARY EXHIBITS

For data supporting material in the "Summary Statement", see the appropriate sections in the full statement (pp. 33-118) and in this Technical Appendix.

.

Exhibit A -- No Economic Justification for an Increase

This exhibit summarizes the conclusions of the full statement. The basis for the finding that copyright owners' income has outpaced inflation is provided in Section 1.B. of the full statement, pp. 37 to 43. The impacts of an increased statutory rate are spelled out in Section II.A. to II.D. of the full statement, pp. 56 to 81.

Exhibit B -- Price Per Tune is Down; Copyright Owners' Share is Up

This conclusion is based on Exhibit 1, p. 36. It should be noted that the price per tune received by record companies has declined in current dollars since 1909, even though today's product is far superior in quality.

Exhibit C -. Mechanical

ties Have More Than Doubled

The data in this exhibit are based upon Exhibit 3 in the main report, p. 39. The source of the figures is CRI's financial survey of recording companies, which is explained in detail later in this appendix under "Exhibit 5".

Exhibit D.. Mechanical Royalties Outpace Inflation and

Median Family Income, 1963-1973

These data are also based on Exhibit 3 in the main report, p. 39. Data pertaining to the Consumer Price Index and Median Family Income are from the Statistical Abstract of the United States.

Exhibit E -- Mechanical Royalties Paid Per Released Tune

Outpace Inflation and Median Family Income, 1963-1972

These data are based upon the analysis in Exhibit 4 of the main report,

p. 43. The assumptions behind the exhibit are discussed later in this technical appendix under "Exhibit 4".

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