trary guess as can be made. In view of the fact that the entire production process is involved in the creation of copyrightable motion pictures, this $350 million figure will be accepted as the measure of payments for creative efforts in the production of motion pictures in 1954 rather than the earlier suggested figure of $25 million. At best, the latter figure seems to be minimum for direct payments to storywriters.

(j) “Direct” and “indirect” revenues

copy

The complex nature of the revenues of creators in the creative right industries (group II) indicates the desirability of one further breakdown of the figures; namely, the separation of the total revenues of creators into "direct" and "indirect" payments. Estimates of this separation are shown in table IV, which follows. These estimates indicate the extent to which the creative copyright industries make "outpayments" to creators for rights to their creative work; the remainder consists mostly of internal payments (to employees-forhire in various functions) which are reflected in the creative contribution of the industry. As the nature of the creative copyright industries (group II) would indicate, only a small portion, perhaps 10 to 12 percent, of their total payments for creative work are in the form of "outpayments" to independent creators. The informed judgments on which the table is based await further testing on the basis of detailed analysis of the internal accounting reports of representative firms in each industry; it has not been possible to make this analysis. as a part of the present study.

It should be understood that the statistical basis for table IV is very meager. Informed judgment has been substituted for statistical measurement and the possible margins of error are wide.

TABLE IV. Creative copyright industries-Total revenues of creators from copyrightable materials, separated into direct and indirect payments

1 Direct payments are those paid out to free-lance creators as royalty payments and other payments for rights to utilize copyright material; indirect payments are all other payments for creative efforts.

Sources:

Col. I: Supra, app. B, group II, secs. (a) to (i), inclusive, pp. 52-54.

Col. II: Those figures are largely informed guesses based on general knowledge of the organization and operation of the industries. As for "Motion picture producers," the figure used is explained supra pp. 54-56.

Col. III: Col. I less col. II.

GROUP III. PAYMENTS FOR THE CREATIVE EFFORT OF INDIVIDUAL CREATORS

(a) Payments to composer-lyricists by performing rights' organizations

Form of payment.-Performing rights' organizations control the "small rights" assigned to them by music publishers or individual composer-lyricists and license those rights to persons or organizations wishing to give public performances of the copyrighted works. Payments are made to the organization under a contractual arrangement, and revenues are in turn divided and remitted, in accordance with contractual provisions, to the composer-lyricists and/or music publishers.

ASCAP is an organization of music publishers and individual composer-lyricists. The ASCAP revenues, after expenses, are divided evenly between the two groups and then distributed to firms and individuals under formulas set up by each of the groups. Thus, the composer-lyricists receive, as a group, 50 percent of the net revenue of ASCAP.

As to BMI, the other major performing rights' organization, it contracts with complete freedom with music publishers for the rights to license the public performance of copyrighted musical works, and, in some cases, directly with composer-lyricists. In the absence of any more reliable evidence, it is assumed that 50 percent of the outpayments by BMI were finally received by composer-lyricists.

Amount of payment.—The increasing gross revenues of radio and television have brought commensurate increases in the gross revenues of ASCAP and BMI. Figures for 1954 are not available, but in another study, estimates of the composer-lyricists' revenues from ASCAP and BMI in 1956 were made as follows:

It is known that this form of creators' revenues has increased rapidly during the past few years. Therefore, the figure is reduced arbitrarily to $10 million for the year 1954.

(b) Payments to other individual creators

Forms and amounts of payment.-Creators not classified elsewhere in this study are paid directly by the person or organization for whom they work, either on a free-lance or contractual basis. Portrait painters are characteristic of this group, although sculptors, illustrators, other graphic artists, model makers, etc., are also included. It is intended that this classification shall be a "miscellaneous" classification, concerning which little or nothing is known statistically. Arbitrarily, a gross revenue of $25 million is assigned to this group.

"The Economic Aspects of the Compulsory License in the Copyright Law," by William M. Blaisdell, to appear in a subsequent study (No. 6) in this series of Copyright Law Revision Studies.

IV. ADDENDUM: THE COPYRIGHTED COMPONENT OF COPYRIGHTABLE

MATERIALS

In the preceding sections of this study, the major subject of consideration has been copyrightable materials: the size of the industries which are closely related to and/or dependent upon the exploitation of copyrightable materials; and the revenues of creators of copyrightable materials. This section will consider the extent to which copyrightable materials are "formally" copyrighted, i.e., a copyright claim is registered in the Copyright Office.

80

The copyright industries were defined in section I, supra, so as to conform as closely as possible to the categories set forth in the copyright law, and the revenues of creators in those industries were estimated. Both the size and the revenues have ben estimated in monetary values; unfortunately, the volume of copyrighted material registered in the Copyright Office is not available in comparable form. Therefore, it will be necessary to abandon statistical estimation in attempting to separate the volume of copyrighted materials from the volume of copyrightable materials, and substitute for it informed judgment concerning the organization and operation of the copyright industries.

The results are shown in table V, page 59, infra. Not all of the copyright industries produce copyrightable materials. From table II, page 28, supra, the basic producing copyright industries have been selected, and they are shown in table V.

Two possible measures of the value of copyrightable materials have been estimated in the earlier sections of this study: The national income originated by the copyright industries, and the revenues of the creators of copyrightable materials. The former of these two estimates would probably overstate the value of copyrightable materials, and it is possible that the latter would understate it. However, because the revenues of creators seems to represent more closely the actual value of copyrightable materials, and in order that the estimate may not be excessive, it has been decided to accept the latter estimates, which are set forth in column I of table V.

In judging the portion of copyrightable values which has been copy. righted, each industry has been judged separately, even though certain of them appear to have some common characteristics. Book publishing, periodical publishing, and motion picture production copyright practically their entire output. Hence, their output is both copyrightable and copyrighted. Also, radio broadcasting and television produces a relatively small volume of copyrightable material, all of which is probably copyrighted; it also uses a large volume of material copyrighted by others; motion picture producers, freelance authors and dramatists, advertising clients, etc.

At the other extreme, there is a group of industries which copyright only a small portion of their output: Newspaper publishing, greeting card production, and commercial photography. In the case of newspapers, count in the Copyright Office shows that less than 100 newspapers (out of 9,022 published in 1954) are regularly copyrighted, the remainder being rarely copyrighted. It is recognized, of course,

80 Supra, sec. I-C, p. 28.

81

81 Department of Commerce, Bureau of the Census, "1954 Census of Manufactures," Bulletin MC-27A, p. A–16.

that syndicated material published in newspapers is sometimes copyrighted, and the volume of this has been included in newspaper syndicates.

It is believed that only a small portion of greeting card production is copyrighted, and this has been arbitrarily estimated as about one-quarter of the total contribution to the national income. It is judged that even a smaller portion of the total production of commercial photographers is copyrighted.

The remaining industries present varying complex situations. Advertising, for example, probably produces a large volume of copyrightable material, much of which is never copyrighted, but parts of which are copyrighted by clients, by the agencies, or by publications in which the advertising appears.

News syndicates copyright some of their production, and a small part is also copyrighted in newspapers in which it is published. However, it is judged that the larger portion is not copyrighted under either heading.

Miscellaneous publishing produces a considerable volume of copyrightable materials-maps, atlases, music, directories, and other unclassified publishing. It is considered that a large part of this is copyrighted, mostly by the publishers themselves.

From table V it may be concluded that about 40 percent of all copy. rightable values are formally registered for copyright. However, by far the largest part of the copyrighted values arise out of three industries book and periodical publishing and motion picture production.

It should be recognized that the estimates in this addendum are of the most tentative character, based on judgment rather than factual evidence, and that they are subject to a wide margin of error.

TABLE V.-Copyright industries—Total copyrightable values separated into copyrighted and noncopyrighted components1

1 This table should be read only in conjunction with the accompanying text.

Sources:

Col. I: Supra, text tables, pp. 33 and 34.

Col. II: See accompanying text. Estimates based on informed judgements concerning the organization and operation of the industries.

Col. III: Col. I less col. II.