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Table 3. Royalty Ceiling Rate Necessary in July 1975 and January 1976, to Preserve Purchasing Power
of 2.5 Cents Ceiling Set in 1965 or in 1967
Register of Copyrights, Report to the House of Repre-
sentatives, May 1958, Part 6, p. 58.
See Note 3. In terms of real (1965) dollars, this has
been a 43 decline. (Beginning songwriters, requiring
little capital investment to pursue that line of
work are -- like the small farmer of an earlier genera-
tion --apparently undeterred at least in the initial
stages by an inequitably low return for their efforts.)
CBS Records president Goddard Lieberson in a May 1974
address in London, and RCA Records executive Chet
Atkins in April 1965 both emphasized that "the song's
the thing without which the best artists, musicians
and recording equipment and technicians cannot be
congress feared that the Aeolian piano roll company was
seeking a monopoly by making exclusive contracts with
most of the important proprietors of musical copyrights.
It thus provided in the Copyright Act of 1909 that,
once the copyright owner of a nondramatic musical work
had exercised his exclusive right to license the mechanical
reproduction of that work to one recording or piano
roll company (or record it himself), any or all other
companies had the right to purchase a license to make
similar use of that work. Without some statutory
ceiling on the royalty to be charged. Congress then
decided, such a right was unworkable; and after consi-
derable deliberation that ceiling was fixed by law at
2% per selection for each record or piano roll manu-
factured. Talking machines were new, and record prices
varied widely in a range far below their present level.
1969 Report on Mechanical Royalty Rate on Sound Record-
ings by Mr. Edward Knight of the Library of Congress
Legislative Reference Service,
For a single, of course, the maximum increase would be
3 per record (one selection on each side) over the
level noted by the House a decade a go. Juke-box com-
panies, which in the last year alone paid an increase
of 258 in the cost of singles purchased wholesale from
the record industry (Statement of Fred Collins, Jr.,
President, Music Operators of Asrica, Billboard,
July 19, 1975, p. 3), are thuslikely to feel any
noticeable economic impact from this man
three penny increase.
14. See sote ).
:'. $. Nep'93-98), 1974, p. 148.
fee Prol, Glover', testimony, for example, on pp. 19,
@i4, 889, 901, 922, 816, 771, 810 and 7?) of the June
1945 Hear inga before the House Judiciary Subcommittee
or. Sisyright. Prof. Glover also warned that increas-
1:9 the mechanical rate ceiling night require a
rution in the number of songs per album. The ceil-
ir tas not been raised but the reduction (from 12 to
19:occurred ar.yway, thereby increasing the record
comary's price fer song and decreasing the composer'.
royalty per altum,
".. tward 1961-68 International Record Survey, pp. 10-11
the aralysts contained in this staterent relles
"eessarily on paratii.od list prices, the age-old prevalenie
c1... . at the retail level does not alter the concessione
Ar kur er.!t ira rut. as it i. the relative change in prices
er the last 10 years that matter and there i. no evidence
at the ratio of realized actual retail price. to list price.
a. delined. On the intrary, there 1. ready to believe that
Pey have risen in the last ten years, thus ignilying an even
or per ell active price per Selection increase than the 1106
cites in te text.
See Mx. Dovi.. testierny. pp. 515-516, March 21, 1967
Sena!. Judiciary S feittee Mearing..
17, Ire UE RAY B:SINESS by Clive Davi.with James
..ver.n, Wilian MOTO Gispany, Inc. 194. The $)."
A 14. prime references differ from the $1.9. and $4.98
tiguenitoatawe by virtue of the then as 'catie ex '18e
Stryket te pole ae e sase lever and kete the per record inotoud of fas.in this savings on to the consumot.
Billboard, March 9, 1974, p. 4.
Billboard, February 1, 1975, p. 3; See also Billboard,
August 17, 1974, p. 8: "... the record tape industry is
recession-proof." See also New York Times, July 23,
1975: "even in a recession, there are huge profits to
be made in recorded music..." "There's nothing like
the record business,' said Marshall Blonstein, a vice
president of Ode Records:
'People talk about big hits in the movies... You know how much it costs to produce a record? - about $40,000, and you can make millions.'"
Billboard, April 5, 1975, p. 4.
Billboard, July 6, 1974, p. 4. See Transcript of test isony
of Joseph B. Smith in u.s. v. Taxe et al.
In truth even this understates the record company's
profit and overstates the music composers' and publishers
income because the current prevailing tape price is
$7.98, not $6.98, and, as shown above, the royalty rate
of the majority of selections is below the 24 ceiling.
The New York Times also estimates a much higher gross
profit margin. Op. cit. supra, Note 24.