Royalty Rates on Other Than Regular Price Records We now turn to an examination of the royalty rates paid on "Club" and "Budget" albums sold by these two recording organizations in order to see whether, in that part of their business, there is "bargaining" between them and publishing companies, case by case, on the strength of their relative positions. A "Club" record is one which is received periodically at a reduced price much as best-sellers are distributed at reduced prices through book clubs. "Budget" records include re-releases of once popular tunes, re-makes of classical recordings, and the like, analagous to a paperback version of a cloth-bound book. Rates on "Budget" Records - It was noted above that the pattern of royalty rates for the 14 "Budget" albums as shown in Exhibit 19 is markedly different from the patterns for "Singles" and List Priced LP albums. For budget albums those which will retail at less than $4 per disc -- most publishers offer a discounted royalty rate for the use of their tunes. This would be the expected pattern both because of the pressure on producers to keep each element of costs as low as possible and because publishers and other copyright owners see opportunities to obtain incremental revenues which may not be otherwise available. Because budget records often constitute reissues under budget labels of tunes produced at an earlier date on regularly priced records, both producer and publisher may perceive an opportunity for additional revenue for a reissue of an older and popular, record at a budget price. Publishing companies regularly grant discounted royalty rates per record for the chance to obtain these incremental revenues. Some publishers grant such discounts on a blanket basis in a letter which covers a publisher's entire catalog of tunes; other publishers do so on a record-by-record basis. It is clear from the pattern of Exhibit 19, that with budget records, discounted rates are the norm rather than the exception. Actually it is surprising that there are so many tunes licensed at the statutory rate. On only 2 of the 14 albums covered are there no discounted rates. For all 14 albums, about a third of the licensed rates are at the statutory level; about twothirds of the rates are at discounted levels. There is some variety among the discount levels as well. Nearly half of the discounted rates are at one-half the statutory rate of 2¢, and additional significant percentages are at a 1/2¢ and 3/4¢ discount. This variety is somewhat greater than that of a decade ago. It appears that individual publishers are setting their own discount policies and no single pattern has yet appeared. But it should be noted that even for such records most publishers continue to have standard discounts for their own tunes which are used in budget albums. 98 |