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126

FULL STATEMENT EXHIBITS

This section of the Technical Appendix documents in detail the sources sethodology for the exhibits in the full statement, pp. 33-118.

LAIDI! 1 .. STATUTORY LICENSE ROYALTIES AND RECORD

CUMPANY PRICLS. ut vs. 1974

Source for the price information cited in the exhibit are given in the footnotes to the exhibit. The financial survey cited in footnote nyt is expand in detail later in this appendix under "Exhibit 5".

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The data relating to mechanical royalties are explained in the "Sources" section at the bottom of Lahibit 3. The two CRI surveys that provided rav tata ke briefly described in footnote "a" of Exhibit S, and are more completely ekstased later in this appendix under "Exhibit $".

CHATTIN nert' performance fee income from recordings vas estimated as

• 0f 139 $ addon (FCC Figures, in music license fees paid by

radio stations and networks to copyright owners in 19'), 901
or 1 million was estimated to be attributable to commercially
produced sound recording,
0f 147.8 million (FCC figures) in music license fees paid by TV
stations and networks in 1973 to copyright owners, 101 or $4 $
alion vas conservatively estimated to be due to the use of
horand recordings,

of 119.4 million in ASCAP receipts in 1973 due to nonbroadcast

neral and background music, live symphomic and concert music,
and royalties from fore'n societies, 201 or $39 sillion was

estimated to be due to commercially produced recordings.
• Finally, it was estimated that I and SE SAC together also were

*countable for about hair of the AS A total for background
**16 is 19'3, or about $: min

These estimates sum to $44.4 million in copyright owners' income from performance fees attributable to sound recordings, an increase of 2833 over the level of 1963, as reported in the 1965 Glover Statement.

In terms of the estimated mechanical royalties, it will be noted in footnotes "a" and "b" of Exhibit 3 that there are two estimates provided. The footnotes indicate that the two estimates are from different surveys, and it explains our rules for the use of each. The lower estimate ($77 million in 1973 and $79 million in 1974) is from a lengthy financial survey which was first conducted by CRI in 1973 and inter updated in 1974 and 19.5. It is discussed in detail below under the notes to Exhibit 5. The higher estimate is from a short, special 34-company survey which CRI conducted in 1975 in order to obtain the most recent information on mechanical royalties paid. It was conducted as follows:

A two-question survey was sent to 96 record companies
in early 1975. The companies comprised all those member
finas of the Recording Industry Association of America
plus an approximately equal number of presumed prospective
Bembers. Thirty-four companies responded. Those who did
not respond did so for a variety of reasons -- some were
no longer in business, others had merged or had been
acquired, and many were inactive and had no sales during
the period. When compared with RIAA industry sales esti.
mates, it appeared that the 34 respondents represented
close to 981 of industry sales .. and hence, nechanical
royalties paid. Thus the figure of $83 million for
mechanical royalties paid in 1974 is a highly reliable
number.

On the next four pages following, the remorandum introducing the short survey. the one-page questionnaire, the nases of the respondent firs, and the raw survey results are provided.

128

MEMORANDUM

* December 2, 1974

TO:

Record Companies

FROM:

Cambridge Research Institute, Cambridge, Massachusetts
Telephone: (617) 492-3800

SUBJECT:

1973 and 1974 Statistics on Mechanical Fees Paid by the
U.S. Record Industry

During recent Senate hearings on the Copyright Revision Bill, questions were raised about the total amount of mechanical fees paid by the record industry. In order to illustrate the severe impact on the record industry of raising mechanical fees from 2¢ (under existing copyright law) to 3¢ (under the copyright bill passed by the Senate in September 1974), there is an urgent need to collect statistics on the mechanical fees paid by as many record companies as possible. Could you, therefore, please fill in the attached questionnaire and return it by January 15.

The following procedure has been established so your company's financial data will be handled in a confidential manner:

After you have completed the enclosed form keep one copy
for your files and send one copy to the CPA firm of
J. K. Lasser & Company, 666 Fifth Avenue, New York,
New York 10019. (You may use the preaddressed envelope
that is enclosed.)

As you will notice, your forms have been pre-coded with
a company number known only to Cambridge Research
Institute. The CPA firm of J. K. Lasser & Company will
not know the name of your company. In this way, your
company's name will not be associated with your financial
data.
The financial data you send to the accountants will be
combined with data from other firms, which will prevent
disclosure of individual company information. Your
reporting forms will be destroyed.

97-786 0 . 76 - pl. 3 - 10

RLAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 AND 1974

Company
Code Number

Send form to:
Ms. Millicent Hauser
J. K. Lasser & Co.
666 Fifth Avenue
New York, N. Y. 10019

Questions may be referred to:
Mrs. Carol Ceri
Cambridge Research Institute
Telephone (617) 492-3800
Cambridge, Mass.

Only financial statistics on record and tape operations in the

United States should be supplied.

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• The.. figures can be estimates if necessary, but please indicate if they are.

PLEASE VAIL THIS INFORMATION BY JANUARY 15, 1979.

130

Record Companies Which Responded to the Questionnaire Entitled

**RIAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 and 1974"

ABC/Dunhill Records
Alshire International, Inc.
A&M Records, Inc.
Assonia Records
Arista Records

Acastic Recording Corp.
Bee Gee Records
Buddah Records
Capitol Records, Inc.
Challenge Records

Cisnimon, clo Coldband Records
Colambia/Records Group
Deneyland / Vista Records
Elektra 'Aylarn/Nonesuch Records
CNP Crescendo Record.

GRT Corporation
Hickory Records, Inc.
kva-Delick-Music & Records Corp.
London Record.
Longines- Symphonette Recording Society

MCA Records, Inc.
M City Record.
Na mhboro Record.
Phonogram, Inc.
Packwick International, Inc.

Priydor, Inc.
RCA Records
Sa voy Records, Inc.
Su..ex Record.
29th Century Record,

Cmited Artist, Music & Record. Group, Inc.
Tama. J. Valentino, Inc.
Warner Bros. Records
Wd Record

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