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
successful.
11. 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 considerable deliberation that ceiling was fixed by law at 2 per selection for each record or piano roll manufactured. 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
34 per record (one selection on each side) over the
level noted by the House a decade ago. Juke-box com-
panies, which in the last year alone paid an increase
of 25% in the cost of singles purchased wholesale from
the record industry (Statement of Fred Collins, Jr.,
President, Music Operators of America, Billboard,
July 19, 1975, p. 3), are thus likely to feel any
noticeable economic impact from this maximum
three penny increase.
:. S. Rep't 93-983, 1974, p. 148. (Emphasis added.)
See Prof. Glover's testimony, for example, on pp. 819,
8.4. 889, 901, 822, 816, 777, 810 and 773 of the June
1965 Hearings before the House Judiciary Subcommittee
of. Copyright. Prof. Glover also warned that increas-
ing the mechanical rate ceiling might require a
reduction in the number of songs per album. The ceil-
ing has not been raised but the reduction (from 12 to
it occurred anyway, thereby increasing the record
compary's price per song and decreasing the composer's
royalty per album.
The precise figure is $998,400,000, calculated as
follows:
oard 1967-68 International Record Survey, pp. 10-11
23, Jure, 1975, p. ̄).
While much of the analysis contained in this statement relies
necessarily on published list prices, the age-old prevalence
of discounts at the retail level does not alter the conclusions
drawn therefrom, inasmuch as it is the relative change in prices
over the last 10 years that matters and there is no evidence
that the ratio of realized actual retail prices to list prices
has de-lined. On the contrary, there is reason to believe that
they have risen in the last ten years, thus signifying an even
larger effective price per selection increase than the 110
See Mr. Davis's testimony, pp. 515-516, March 21, 1967
Senate Judiciary Subcommittee Hearings.
21. LIVE, INSIDE THE RECORD BUSINESS by Clive Davis with Jame
Willwerth, William Morrow & Company, Inc., 1974. The $1.19
and 14,79 price references differ from the $3.98 and $4.98
figures noted above by virtue of the then applicable excise
When this tax was repealed, however, the industry kept
the price at the same level and pocketed the 19 per record
instead of passing this savings on to the consumer.
23. 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.
of Joseph B. Smith in U.S. v. Taxe et al.
See Transcript of testimony
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 2 ceiling.
The New York Times also estimates a much higher gross
profit margin. Op. cit. supra, Note 24.
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