160 arrived at in the exhibit are self-explanatory and are discussed in the text. The emphasis in this exhibit is on the effect of a 59% increase in mechanical royalty payments on U.S. recording company pre-tax profits from all sources. Exhibit 8 -- MECHANICAL ROYALTIES COMPARED TO RECORDING INDUSTRY This exhibit shows in similar fashion the effect of the proposed 34 rate 2's a domestic recording industry profits (line 11, Exhibit S-C, p. 49). Mechanical royalties are paid on the basis of recordings made and sold in the S As the exhibit illustrates, the potential impact of a higher rate on domestic profits is disastrous. EANINE 9 -- IMPACT OF A COPYRIGHT ROYALTY INCREASE This exhibit is self-explanatory. However, it is important to recognize that the prices and dollar margins presented are only illustrations, based on * 36 98 list price record. The average price paid by consumers on all records is much less than the average 15,77 they pay for a $6.98 record. The exhibit also shows the more moderate impact on the consumer price a mechanical rate increase of 1/2¢ would have, as compared to the proposed le increase It must be recognized that a cost increase at the producer level cannot be passed along without increases along the way. The increase in cost to Bidi.emen that would result from an increase in the mechanical royalty being passed on by recording companies would lead to still further increases by 3164.emen in order that they be able to maintain their margins Such further increases would be justified by the additimal costs they would inrur, such s for insurance, inventories, financing, bad debts, and the like Exhibit 10 COST TO CONSUMERS OF A 3¢ STATUTORY LICENSE RATE This exhibit, with footnotes, is self-explanatory. (RIAA estimates of retail sales of recordings, at list prices, are made annually.) Exhibit 11 IMPACT OF A COPYRIGHT FEE INCREASE Statistics for this exhibit are derived from the principal financial survey, as explained in the footnotes to the exhibit. Exhibit 12 -- TUNES AND PLAYING TIME OF TOP 150 The exhibit, with footnotes, is self-explanatory. Exhibit 13 RECORD MAKERS UNIT SALES PER RELEASE AND Date in this exhibit are based on an analysis of results that were an integral part of the 1973 financial survey. (See Technical Appendix, on Exhibit 5). The distribution of sales by volume is from Form (5) of the questionnaire. The breakeven information is from Form (4), and is summarized on the following page: 161 BREAKEVEN ANALYSIS 1972 Figures are in $ except for item 5, which is in units) ). Contribution to Fixed Overhead and Profit (1 minus 21 $0.158 $1.130 $1.297 $1.805 $1.830 Average investment in Fixed Overhead per Release Fixed A&P, M.dio, Recording, and Talent Costs recuped Artist Royalties and Bonus Payment sed Manufacturing and Shipping Costs ved being. Promition, and General Costs. epreciation Coats Required N.m.her of Records which have to be Sold per kelease to Break Even in Terms of Average investment in Fixed Overhead per Release (4−3) "These costs are charged to the records which are manufactured before the tapes. Tapes are produced only when are ord of the music has been successful. No explanation was given by the reporting company of why a negative number was given for "fixed manufacturing costs for classical tapes or no figure was given for "fixed depreciation costs" for such tapes. 01 19°3 survey of recording companies Exhibit S, cont. Survey - 2 155 Part B: Wholesale Prices, Titles Released, Units Sold, Number of Employees 4. Number of independent producers whose records you distribute: The estimate of the of industry sales represented by the surveyed companies was based on excise taxes paid by these companies in 1955-1963. Totals do not always add precisely because of rounding The figures here are only for the US operations of the record companies surveyed CB: a 1963 survey of landing record companies for results in more detail see fxhibit 5 The statistics here are the sum of the figures repostad by the mudrayed companies and do not include any estimates for the multitude of companies not in the survey. |