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11. IMPACT OF A COPYRIGHT FEE INCREASE ON JUKEBOX OWNERS
For data supporting material in the "Summary Statement", see the appropriate sections in the full statement (pp. 33-118) and in this Technical Appendix.
Exhibit A-- No Economic Justification for an Increase
This exhibit summarizes the conclusions of the full statement. The basis for the finding that copyright owners' income has outpaced inflation is provided in Section 1.B. of the full statement, pp. 37 to 43. The impacts of an increased statutory rate are spelled out in Section II.A. to II.D. of the full statement, pp. 56 to 81.
Price Per Tune is Down; Copyright Owners' Share is Up
This conclusion is based on Exhibit 1, p. 36. It should be noted that the price per tune received by record companies has declined in current dollars since 1909, even though today's product is far superior in quality.
Exhibit C -- Mechanical Royalties Have More Than Doubled
The data in this exhibit are based upon Exhibit 3 in the main report,
The source of the figures is CRI's financial survey of recording companies, which is explained in detail later in this appendix under "Exhibit 5".
Exhibit D-- Mechanical Royalties Outpace Inflation and
Median Family Income, 1963-1973
These data are also based on Exhibit 3 in the main report, p. 39. pertaining to the Consumer Price Index and Median Family Income are from the Statistical Abstract of the United States.
Exhibit E Mechanical Royalties Paid Per Released Tune
Outpace Inflation and Median Family Income, 1963-1972
These data are based upon the analysis in Exhibit 4 of the main report,
The assumptions behind the exhibit are discussed later in this technical appendix under "Exhibit 4".
Payments to Copyright Owners Would Go Up $47 Million
The finding is explained on pages 56-60; the underlying data are to be found in Exhibits 6 and 7, which are discussed in this appendix. Suffice it to say here that the $47 million figure does not assume that all licenses would be paid at 34. It is based on the study finding that the existing rate structure, with standard discounts off the statutory rate, would prevail -- but at a higher plateau for all rates. This study finding is explained in Section 11. E. of the full statement.
Note that the increase in mechanical royalties paid would be more than the simple 50% achieved by raising the rate from 24 to 3¢ because of the effect of the proposed playing time provision in Sec. 115 of H.R. 2223. (See Exhibit 6.)
Exhibit G -- Annual Cost to Consumers Could Go Up By $100 Million
Calculation of the increase more precisely $97.6 million is shown in Exhibit 10, page 67. Note that the increase to Consumers is considerably more than the $47 million increase to recording companies. The logic for this is explained in this Technical Appendix under Exhibit 9.
These data come directly from Exhibit 13 of the main written report, p. 74. The source of that exhibit, a study conducted by Cambridge Research Institute in 1972, is discussed later in this appendix under "Exhibit 13".
Rates Paid are Statutory Rate and Standard Variations
These percentages are computed directly from Exhibit 21, p. 118, which is discussed in full later in this Technical Appendix.
Exhibit J In 1974 as in 1963 Tunes Were
Licensed at 2¢ or Standard Variations
The right-hand side of this exhibit is computed from Exhibit 21, p. 118. There, .it will be seen that 21 of the 2,593 tunes studies which had paying
licenses, were paid at rates other than standard variations. This amounts to 0.8% of the tunes sampled.
The left-hand side of Exhibit J is taken from the 1965 Statement of John Desmond Glover on H.R. 4347 Section 113 (c) (2).
-- No Economic Justification for an Increase
This exhibit restates the conclusions of Exhibit A.
This concludes the section of the Technical Appendix covering the Summary exhibits.
FULL STATEMENT EXHIBITS
This section of the Technical Appendix documents in detail the sources and methodology for the exhibits in the full statement, pp. 33-118.
Sources for the price information cited in the exhibit are given in the footnotes to the exhibit. The financial survey cited in footnote "b" is explained in detail later in this appendix under "Exhibit 5".
Exhibits 2 & 3 -- INCOME TO COPYRIGHT OWNERS FROM
RECORDINGS, 1973 vs. 1963
The data relating to mechanical royalties are explained in the "Sources" section at the bottom of Exhibit 3. The two CRI surveys that provided raw data are briefly described in footnote "a" of Exhibit 3, and are more completely discussed later in this appendix under "Exhibit s".
Copyright owners' performance fee income from recordings was estimated as follows:
• Of $37.5 million (FCC figures) in music license fees paid by
radio stations and networks to copyright owners in 1973, 90%
produced sound recordings;
stations and networks in 1923 to copyright owners, 10% or $4.8
of $19.4 million in ASCAP receipts in 1973 due to nonbroadcast
estimated to be due to commercially produced recordings;
accountable for about half of the ASCAP total for background