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little success in one recording becomes a hit when a new recording is made with a different artist or arrangement.“- Yet, ironically, the performer who makes a composer's tune into a hit, and earns that composer much compensation in the form of mechanical royalties and performance royalties, shares in none of the performance royalties himself. The composer is desertedly paid performance fees for his contribution to a recording used by broadcasters, but the performer, too, is entitled to compensation. Royalties from record sales do not sustain all performers

Performance fees would provide needed income to those performers who fail to earn substantial royalties from record sales-classical artists, jazz artists, and many popular artists as well. Such performers “never burst into stardom because their appeal is only felt by a narrow segment of the public. They may never have a hit record, although they may have many, many records which are performed time and again for commercial profit." ** One performer reports, "he is ‘very big in supermarkets and elevators', and everywhere he goes he hears his music being played. Yet he does not receive one dime for these commercial performances."

Performance royalties would also bring income to singers no longer collecting substantial royalties from the sale of their hit recordings. Many famous artists, such as Ernie Ford, Mitch Miller, and Pat Boone, sell fewer records today, but airplay of their old records remains heavy. Some radio stations still offer the recorded music of Nat King Cole, and "... everyone benefits but Nat Cole's widow and children. The sponsor attracts an audience with one of the top vocalists of our generation, and the radio station sells time to the sponsor, the writers and publishers of the songs are paid performance fees for the broadcast of these songs, but Nat Cole's widow and chil. dren receive absolutely nothing, nor does the record company that spent 20 years building him as a top recording artist, and owns the masters which are used for these delayed performances," 15 Such performers (and their heirs) should be compensated for the continued commercial exploitation of their endeavors by others.

Performance fees would, of course, also increase the income of those fer artists who are presently collecting sizeable artists' royalties from the sale of their recordings. However, the recording carecrs of even su(CC88ful performers tend to be distressingly short, and artists, like baseball players, must often maximize income within short periods. “It is not unusual for a performer to find himself in a high tax bracket for a year or so, to be followed by a lifetime of oblivion. The rise of a star is sometimes meteoric, but his popularity often burns out just as quickly.” 10 Furthermore, the percentage of performers who are successful for even a brief period is far smaller than is apparent to the general public, which has been fed tales of the fortunes earned by the recording world's fleeting stars. Many artists dream of riches, but few actually attain them. One recording company reported in 1967, that of the performers that they list, only 14 percent had earned enough royalties on sales to defray the expenses normally charged to artists' royalty accounts. Only 18S or so of its 1,300 performers had a profit in their royalty account." Performance fees from broadcasting would supplement the income of at least some of these artists who are receiving meager royalties from sales.

The Minority Report of the Senate Judiciary Committee (in July 1974) es. pressed concern that, if broadcasters had to pay performance royalties to performers and record makers, “it may well become cheaper for broadcasters to revive studio orchestras and be content to pay the musicians' union scale." **

12 See “Publishers. Labels Find Success With 'Underexposed' Copyrights", Record World, January 25, 1975, p. 4.

13 Statement of Stan Kenton in Ilearings Before the Subcommittee on Patents, Trademarks, and copyrights of the Committee on the Judiciary, U.S. Senate ... S. 597, April 1967, pp. 542 and 543.

14 Ibid.
15 Statement of Alan Livingston in Ibid., p. 500.

10 Statement of Stan Kenton in Hearings Before the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, U.S. Scrate . . . S. 597, April 1967, p. 821.

17 Statement of Michael DiSalle in Ibid., p. 832.

18 U.S. Senate, Committee on the Judiciary, Report on Copyright Law Revision (Report No. 93-983), July 3, 1974, p. 226.

Performers certainly would have no objection to such a turn of events, but unfortunately, broadcasters are unlikely to abandon the use of recordings simply because of a new performance royalty which increased their expenses by less than 1%.18

In conclusion, performers are entitled to compensation for the commercial use of recordings created by their artistic endeavors, just as composers certainly merit the performance fees paid to them for the privilege of using their work in broadcasting for profit. The recording company's creative contribution to the artistic rendition is very substantial

A recording company makes a two-fold contribution to a recording: the technical manner in which it records a piece of music, and the financial risk it undertakes in producing the recording.

The quality of a recording and its appeal to listeners is very much affected by the way the recording was made: the type of recording equipment and studio facilities used, the electronic effects and recording techniques employed, and the character of the song arrangement and background music selected. As recording techniques have become more sophisticated and as experimentation with electronic effects has grown, the creative contribution of recording companies to their products has increased dramatically, beyond simply the fidelity of a recording.

An article in the Wall Street Journal describes "How Record Producers Use Electronic Gear to Create Big Sellers." 20

“Each instrument has its own microphone leading to its own track on the big console's recording tape. ... (The producers) will cut, slice and dub tracks from the best of the musicians' performances to eliminate flubs by one or two of them, and they'll pick tapes from (the singer's) performances for her best lead vocal. For her harmony parts, they can manipulate the tapes to make her sound like a duo, a trio, a quartet-or even, if necessary, a 16-voice choir. They also will add violin flourishes, called 'sweeteners'. Finally they will blend and distill all this into two stereo record tracks."

The creative contribution of recording companies was recognized by the Senate Committee on the Judiciary when it stated, in its July 1974 Report on Copyright Law Revision, "The Committee ... finds that record manufacturers may be regarded as "authors' since their artistic contribution to the making of a record constitutes original intellectual creation." 21

19 See pages 41-42, infra.
20 Wall Street Journal, February 12, 1974, p. 1.

21 U.S. Senate, Committee on the Judiciary, Report on Copyright Law Revision (Report Xo. 93-983), July 3, 1974, p. 140.

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100-300

300+

0-2 2-4 4-8 8-10 10-20 20-50 50-100 Number of Discs Sold (Thousands)

22,000 Discs

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EXHIBIT 1.-Record makers unit sales per release and breakeven points (1972)

Source: These figures are based on an analysis done by Cambridge Research Institute of a sample of the releases of eight record companies which had 51 percent of the industry's sales in 1972.

The manner in which a piece of music is recorded contributes not only to the music quality but also to the audience lure and, therefore, the commercial value of any recording used by broadcasters. Recording companies also make a contribution by creating a product that can be used by radio and TV stations without hiring performers. Radio's use of recordings builds audiences, sells commercial time, and creates radio profits. Television's use of recordings adds an important dimension to TV programs. For these contributions, recording companies are entitled to compensation by broadcasters. The recording company must underwrite serious financial risks

In addition, recording companies undertake a substantial financial risk in producing recordings, for the large majority of recordings do not even recover their costs, let alone make a profit, and the proportion of unprofitable recordings is rising. Over 80% of the 45 RPM records and over 75% of the "popular" LP records released do not have sufficient sales to break even. (See Exhibit 1 on the next page.) An even higher proportion, 95%, of classical records are produced and marketed at a loss. It is only reasonable to expect that all who benefit from this risk-taking by the recording companies should compensate them for any commercial value derived from the use of their recordings.

With performance fees, the record producing companies might be encouraged to make more classical and experimental recordings, for which the sales outlook is uncertain. As one recording company president has pointed out

" 23

"If performance fees were to go to the record company and the performer, there would be an end to the record industry's frantic concentration on teenage rock-and-roll in search for fast and large sales and quick return. Presently, the only road to profit for the performer and the record company is the sale of records: therefore, most music must be designed for the specialized record-buying market. ... The generation that listens to the 'good music stations are, unfortunately, not record buyers. ... Let the record companies be compensated for the use of their records on the air, and they will be financially able to record for the benefit of the large listening audience which wants to hear good recorded music, but which does not necessarily buy records." 22

The commercial risks involved in producing a recording used by broadcasters fall on record companies much more than on publishing companies. If a recording is not a commercial success, the record maker loses. The publishing company and the composer are still paid mechanical fees by the record company whether or not the recording is profitable, and they also get whatever performance royalties accrue from the recording with no additional outlays on their part. To produce a recording costs considerably more than to print sheet music, and recording companies generally expend much more money (and ingenuity) promoting the music than does the publisher. As the President of the American Guild of Authors and Composers has pointed out, the role of the publisher is declining in importance: "Years ago a publisher bought a song, plugged it and got it performed, in eventual hopes of getting a record. Now a song is nothing without a record at the start.'

At least in part because of this diminishing relative contribution of the publisher to a tune's success, composers more and more often act as their own publishers for promotional purposes and hire a commercial publishing company solely to print and distribute the sheet music. Although we do not question that the publishing corporations are still entitled to the performance fees they currently receive from broadcasters, it is surely true that record makers and performing artists also merit performance fees for their creative contribution and their commercial risk in producing the recordings used so extensively by broadcasters. The legal merits for a performance right

In addition to these observations, it is very important to recognize that the authoritics agree unanimously that Congress has the power under the Constitution to require that artists and recording companies be paid performance royalties for the commercial use of their recordings. For example:

The Register of Copyrights wrote in July 1974, "Performing artists contribute original, creative authorship to sound recordings in the same way that the translator of a book creates an independently copyrightable work of authorship. Record producers similarly create an independently copyrightable work of authorship in the same way that a motion picture producer creates a cinematographic version of a play or novel. In my opinion, the contributions of both performers and record producers are clearly the 'writings of an author' in the constitutional sense, and are as fully worthy of protection as any of the many different kinds of 'derivative works' accorded protection under the Federal copyright statute." 24

The Supreme Court stated in 1973 that the copyright clause of the Constitution can extend to “recordings of artistic performance." 25

The Senate Judiciary Committee concluded in 1974 that recordings are entitled to full copyright protection : “Records are 'writings and performers can be regarded as "authors' since their contributions amount to original intellectual creations. The committee, likewise, finds that record manufacturers may be regarded as `authors' since their contribution to the making of a record constitutes original intellectual creations. The committee endorses the conclusion of the Copyright Office that sound recordings are just as entitled to protection as motion pictures and photographs.”

In conclusion, because of the creative activity involved in recorded performances that is recognized unanimously by the relevant authorities, there is no

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22 Testimony of Alan Livingston in Hearings Before the Subcommittee on Patents, Trademarks, and copyrights of the Committee on the Judiciary, U.S. Senate, Part 2, (March 1967), p. 504.

23 New York Times, August 8, 1966.
24 120 Cong. Rec. S14565 (daily ed. Aug. 8. 1974).
25 Goldstein v. California, 412 U.S. 546, 562.

28 U.S. Senate, Committee on Judiciary, Report on Copyright Law Revision, (Report No. 93-983), July 3, 1974, p. 140.

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