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My name is John D. Glover. I am a Director of the Cambridge Research Institute, a management consulting firm located in Cambridge, Massachusetts. Our firm and its principals have made economic studies of many industries, including, among numerous others, banking, retailing, footwear, paper, telecomunications, coal, and hotels. We have also studied the health care field for hospitals and government agencies.
On behalf of the Recording Industry Association of Anerica, we have made an extensive study of the economics of the recording industry. A particular focus of that study has been the effects of a possible increase in the statutory mechanical royalty for the licensed use of copyright music, and specifically the issues raised by Section 115 of H.R. 2223.
We appeared on behalf of the recording industry just 10 years ago, when an omnibus Copyright Bill was being considered. In preparation for these hearings, we have collected a mass of new data that bear on the economics of the recording industry over the past decade.
It is our hope to lay before this Committee the economic data which are essential for an understanding of the economics of recorded music and for an equitable judgment on Section 115 of the Copyright Bill now before you.
In addition to this summary, we should like to have included in the record the appended detailed analysis of the recording industry and of the impacts of the proposed changes in the Copyright Act that relate to royalty payments for the use of copyright music.
To summarize, as shown in Exhibit A, our study leads to two major conclusions thoroughly documented by firm statističal data:
FIRST, there is no economic justification for increasing the
The music publishing industry has argued that a higher rate is justified by virtue of inflation. We shall show that, in fact, income going to music publishing companies and other owners of copyright music has risen much faster than inflation, as measured either by (a) the Consumer Price Index, or (b) Median Family Income. In fact, publisher income from mechanical royalties has more than doubled in the past 10 years.
SECOND, the higher rate would have serious impacts on all other
There would be considerable pressure for a rise in record prices
recordings, including the jukebox industry.
under grave, not minor, pressures.
A No economic
justification for an increase
Copyright owners' income has outpaced inflation
Increased statutory rate could hurt:
consumers recording artists and musicians record makers
THERE IS NO ECONOMIC JUSTIFICATION FOR RAISING THE ROYALTY RATE
Let us respond first to the arguments of the publishing industry that a higher statutory rate is justified simply by the passage of time and by inflation. As to those arguments, we would like to place before you several facts.
Price Per Tune Is Down; Copyright Owners' Share Is Up
Since then, because of technological progress, the
At the same time, the share going to music publishing com-
And it must be noted most especially that this greater