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Exhibit 5, cont.

Survey - 2

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Part B: Wholesale Prices, Titles Released, Units Sold, Number of Employees

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4. Number of independent producers whose records you distribute:

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The serrasta of the 1 of industry sales represented by the surveyed companies was based on excise taxes paid by these companies in 1955-1963.
The 14 percentage was calmulated by the method used for 1967-1973 in Part 1 of Appendix A

Turate do not always and precisely because of rounding. The figures here are only for the U.S. operations of the record companies surveyed.
Figures for their foreign subsidiaries are not included

01 • 193 survey of leading record companies For results in more detail see Exhibit 5 The statistics here are the sum of the figures reported by the surveyed companies and do not include any estimates for the multitude of companies not in the survey.

PART IV

CONSOLIDATED INCOME STATEMENT OF RECORDING COMPANIES SURVEYED BY CRI in 1972, 1973, and 1974

1967 - 1974

(Millions of Dollars)

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income taxes include state as well as federal taxes

various types of recordings See Exhibit I
"Estimates of the ↑ of industry sales represented by the surveyed companies are based on the assumption that industry sales are about half retail
seres at isst prices as reported by ich org This assumption is supported by the prizes the surveyed companies reported charging for their

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Figures for their foreign subsidiaries are not included
Totals do not always add precisely because of rounding The figures here are only for the US operations of the record companies surveyed

BI # 391, 1974 and 1971 surveys of leading record companies For results in more detail see Exhibit 2 The statistics here are the
m of the actual figures reported by the companies surveyed and do not include any estimates for the multitude of companies not in the

Exhibit 6 -- STATUTORY LICENSE, ROYALTIES PER TOP 150 LP ALBUMS

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This exhibit, together with the discussion on pages 56 and 57 is fairly self-explanatory. Nevertheless, it is important that the derivation of the SP figure be completely understood.

The calculation is based on a sample of the top 150 of the "Top 200" LP albums from Hillheard, March 3, 1973; these albums accounted for 165 LP records "helaute some albums contained two records) and 1,653 tunes. The mumber of tures per record was counted, and playing times were measured, tume by tune This, clearly is not a sample of all recordings. Tapes and singles were excluded There would be some releases on singles which did not appear on LP's, but there would be virtually no tape releases which did 8.4 note out on LP's or singles Probably, the top 150 would be representative of the majority of U S. sales, but they are not statistically representative of total US releases or sales

For purposes of calculation, it was assumed that each of the tunes in The top 5 was at the 2e statutury me-hanical royalty rate. In fact, some may have been at a higher rate, some at a lower rate, and there could have been included sime public domain tunes at Dr. Most likely, there was little or no public domain material included, it does not "sell."

in addition, the current general (but not universal) practice of paving adc.tional royalty of 1/24 per minute of playing time over five minutes

sed in the calculation of 224 as the average mechanical royalty per recard under the present law and present practice. That would take care of the tubes that were over 24.

There was then calculated what the mechanical royalty would be under ** 2:23, tune by tune, applying the proposed statutory provisions to the dara on tunes per record and on playing times. The result of this calculation was an average mechanical royalty of 354 per record.

The increase from 224 to 15 is 594, as reported. Whether or not any of the tunes in the sample actually were licensed at less than 26, as some

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probably were, is immaterial to the calculation of the 59%. The calculation
can be looked upon as expressing the statutory rate change (taking account of
the current playing time practice); or it can be regarded as a measure of
the change if, whatever the actual rate, all licenses moved up by 50% (and
the playing time provision in H.R. 2223 were taken account of).

If we had not taken account of the current practice of paying 1/24 per minute over five minutes, the percentage increase shown would be greater than 591. As it is, since as we understand this playing time practice is not universal, probably we are slightly understating the percentage increase of 591.

As to the fact that singles were excluded from the sample, two points are in order. First, their exclusion tends, if anything, to understate what the calculated percentage increase (591) would be were they to be included in the sample. This is so because there is only one tune per side on a single, on an LP, a longer band (incurring the playing time provision of H.R. 2223) subtracts from the playing time available for other bands on the same side. Second, LP's taken by themselves constitute a large and significant portion of total unit sales of recordings. We do not know precisely what portion, but we do know that LP's accounted for about 621 of dollar sales in 1974.

Were tapes to have been included in the sample, the results probably would have been little different. Tunes released are essentially the same as those on records (LP's in the main, we understand). And, far fewer licenses on tape are at less than 24, we are told; the mechanical royalty rate, tune by tune, otherwise is very similar to, or exactly the same as, the rate for LP's.

Note that 1973 data were employed. The results could be somewhat different if 1974 data were examined.

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This exhibit applies the 591 figure developed in Exhibit 6 to total mechanical royalties paid during the four-year period, 1971-1974. Totals

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