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value of mechanical royalties paid in one year by the number of releases in the year, and to compare that figure with the corresponding value in another year.* That is done in Exhibit 4, which measures the trend in royalties per released tune as between 1963 and 1972. Royalties per released tune went from $656 to $1,399, an increase of 113%. That percentage increase is a reasonable measure of the percentage increase in mechanical royalties per tune, although the dollar income per average tune would be considerably higher because of multiple releases per tune. Accordingly, the dollars of royalties per tune were going up faster than the royalties per release of that tune, which, themselves, were going up faster than inflation.

It should be noted and emphasized that these domestic mechanical royalties constituted only part of the income received by copyright owners from recorded music. They also received sizeable foreign mechanical royalties as Exhibits 2 and 3 make clear. In addition, their incomes from performances were about as great as the mechanical royalties and were also accruing faster than inflation.

We shall now turn to an examination of what has brought about the tremendous increases in incomes of copyright owners from recorded music.

*The largest share of mechanical royalties occurs on recently released
tunes, although many releases continue to collect royalties for many years.

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Note: For this Exhibit, the year 1972 was used because it was the latest year for which the numbers and releases were available.

Statistics on releases are from Billboard.

The 11.25 tunes per LP was calculated as follows: In 1963, there were approximately 12 tunes per popular LP. CRI's survey of 13 leading record companies, with 61% of the industry's 1972 sales, indicated that, on the average in 1972, a mechanical royalty of 22.5¢ was paid for each popular LP. With a 2e rate, this would indicate that the average popular LP had 11.25 tunes in 1972. This overstates the number of times released, for one tune may be recorded on both a single and an LP, a practice that was more common in 1972 than in 1963. Also. a given tune may be recorded in several different versions on LP's or singles or both. The number of tunes recorded is only some fraction of the number or releases. The above figures of releases do not include tapes. The copyright holders earn mechanical royalties from the sales of their tunes on tape, as well is on records.

or source of cata, see Exhibit 3D.

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I.

THE HIGH INCOME ENJOYED BY COPYRIGHT OWNERS (CONT'D.)

C.

THE MUSIC PUBLISHING INDUSTRY HAS NOT ONLY BEATEN INFLATION BY
A WIDE MARGIN, BUT HAS BENEFITED MORE FROM ADVANCES IN RECORDED
MUSIC THAN RECORD MAKERS WHO MAKE RECORDED MUSIC POSSIBLE AND
AVAILABLE

Thanks to the revolution in recording technology and in
marketing techniques, sales of recordings have risen
many times over. The burgeoning sales have produced
ever growing income for music copyright owners, who have
consistently earned between 7.6% and 11.1% of record com-
pany sales
far more than the 5% envisaged by Congress
in the 1909 law. Copyright owners benefit greatly from
the popularity of commercial use of records. The record
makers, whose investments and ingenuity are largely re-
sponsible for the sales growth, have earned from these
sales uncertain and sharply fluctuating profits, for this
is a high-risk industry. Record makers, who have brought the
consumer ever-better products, at a lower price than in
1909, are profiting less from the new products than the
publishing companies which have invested little or nothing
in the development of these products.

In order to reach an informed, not to say a fair judgment concerning the statutory mechanical royalty rate and whether it should be increased, one really must recognize and take under advisement some basic facts as to the nature and attraction of modern-day recorded music and the economics of the recording industry.

1. Recordings in 1909.

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Seen from our present-day perspective, the recordings of 1909
when Congress thought it fair that copyright owners should get as much
as 2 per recorded tune --
-- seem naive and quaint, both artistically
and technically. Recordings were made mechanically through an inverted
negaphone and the thin and scratchy results were physically pressed on
one side of a "wax" disc, one tune per disc. Or a mechanical reproduc-

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tion of sheet music was produced through perforations in a roll of paper. The experience of listening to such music -- miraculous in its day, no doubt bears little relationship to the experience of listening to modern recorded music, popular or classical.

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is

The technology of recording sound has advanced tremendously.
Fidelity range, responsiveness, and freedom from distortion
Many and varied sound and musical

only one aspect of this advance.

effects may now be created through use of multiple microphones and
amplifiers, and multi-channel recording tapes controlled througn in-
tricate electronic consoles.

This advancing technology makes extraordinary kinds and ranges of musical expression come alive through artistry of performance, arrangements, musical concepts, and through sound as something to be experienced for itself.

self

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A tune, alone, a configuration of musical notes indicated on a sheet of paper, makes no music, let alone a musical experience. To become music, the tune at least must be hummed or picked out with one finger on a piano. A musical experience far beyond the tune itis in large measure a matter of musical arrangement that reflects a concept. It is in very large measure a matter of the artistry, personality, and emotion of performance. In recorded music, today, the extra dimension of the artistry and technology of the generation and recording of sound is added, and it is often this ingredient that makes for a memorable musical experience.

In less than a generation, the recording industry has gone from "L?" to "Hi-Fi" to stereophonic o quadraphonic sound: from "niczɔgroove" : 3-channel, frequency-screened and corrected tapes.

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3.

These facts about modern recorded music are coming to be recog-
nized and appreciated. An article in The Wall Street Journal des-
cribed "How Record Producers Use Electronic Gear to Create Big Sellers".*

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 'sweetners'. Finally, they
will blend and distill all this into two stereo record tracks.

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Even a president of the American Guild of Authors and Composers
has acknowledged that the popularity of tunes and songs is founded
almost entirely upon successful recordings created and marketed by
recording companies. He said:

Years ago a publisher bought a song, plugged it and got
it published in the eventual hope of getting a record.
Now a song is nothing without a record at the start.

Benefits From, and Contributions to Recorded Music:
Companies and Publishing Companies.

Recording

Overview. In Parts A, B, and C of Exhibit 5, estimates are given
of the revenues, various outlays, and profits of the recording in-
dustry for the years 1955-1964 and 1967-1974. Several important
facts stand out among these data:

Growth in Record Retail Sales. Between 1955 and 1974,
estimated record sales at retail list prices rose from Less
than $280 million to about $2.2 billion. These estimated
retail sales are based on list prices, which has been the
common standard for estimating retail sales over time. 3e-

cause most recordings are sold at a sizeable discount, how

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