Lapas attēli
PDF
ePub
[merged small][ocr errors][merged small][merged small][merged small][merged small]

CHART A

NUMBER OF RECORDED SELECTIONS DISTRIBUTED BY RATE CLASS
PAID BY RECORD COMPANY NO. I TO SIX PUBLISHERS

-

[graphic][subsumed][subsumed][merged small][subsumed]

60

50

[ocr errors]

30

20

10

[ocr errors]
[blocks in formation]

Between 1 and 1.5¢

No.4

[blocks in formation]

Legend

PUBLISHERS

[blocks in formation]

CHART B

NUMBER OF RECORDED SELECTIONS DISTRIBUTED BY RATE CLASS
PAID BY RECORD COMPANY NO. II TO SIX PUBLISHERS

[graphic]

Between 1.5 and 2005

02 Between

1 and 1.5¢

[ocr errors]

No. 1 No. 2

No. 3 No. 4 No. 5

No. 6

Legend

PUBLISHERS

Percent of Total Recorded Selections

CHART C

NUMBER OF RECORDED SELECTIONS DISTRIBUTED BY RATE CLASS
PAID BY RECORD COMPANY NO. III TO SIX PUBLISHERS

[graphic][subsumed][ocr errors][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][merged small][subsumed][ocr errors][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][merged small][merged small]

Table 9 presents the percentage distribution of number of recordings and table 10 presents the percentage breakdown of payments separately for the three record companies and for each of the six largest music publishers receiving royalties from each record company. Each chart presents data for a separate record company, and within each chart there are six columns showing percentge breakdowns of the number of recordings for each publisher.

The variations among record companies and among publishers for each record company are startling. For instance, for Record Companies I, II, and III, 24.0, 38.6, and 57.6 percent, respectively, of the selections manufactured and sold provided for a 2-cent royalty payment. The proportion under 11⁄2 cents per recording varied from 36.5 and 37.7 percent for Record Companies I and II, respectively, down to 4.6 percent for Record Company III.

The range among the publishing companies under each record company was even wider. For instance, Record Company I data revealed two publishing companies for which less than 20 percent of the recordings were paid at more than a 1%-cent rate, whereas for two publishing companies, at least 40 percent of the recordings carried rates in excess of 12 cents. The picture needs only to be looked at, record company by record company, and publishing company within each record company, to reveal how diversified the patterns are. If ever there was any doubt that the 2-cent rate is a ceiling and not a fixed rate, these data offer overwhelming proof to completely remove that doubt.

The charts merely serve to present graphically what is shown in table 9. The different shadings reflect differences in rates, and the patchwork of each chart is indicative of the wide range of differences between publishing companies as well as between record companies. If one were to look at these charts without knowing just what phenomena were being graphically presented, one would find it difficult to believe that these distributions apply to an industry which a witness for the record manufacturers characterized as one in which "the present provisions of the copyright law establish the fees actually paid in practically all instances."

The total number of recordings for which each of the three record companies paid the six leading publishers was 31.6 million, including royalty payments of $476,800 during the second quarter of 1965. This is an average of 12 cents per selection sold and not 2 cents.

The aggregate cost, therefore, was at 11⁄2 cents and not 2 cents as claimed by the record people.

There were, of course, variations among the three record companies since the percentage of dollars paid at 2 cents was 36.1 percent for Record Company I, 52.6 percent for Record Company II, and 62.7 percent for Record Company III. These firms produced and sold all types of records-45's, 33's, singles, albums— and all old types of songs and music (classical, popular, jazz, folk, etc.), using a number of labels and price levels, including record club albums. As one would expect, variations appeared because of the product mix as among low-priced albums, "freebies", record clubs and the like.

The analysis of the royalty payments supports the analysis of the royalty rates. Both offer convincing proof if wide variations in royalty arrangements and that the statutory fee is truly a ceiling and not a fixed price.

IMPACT OF A HIGHER STATUTORY CEILING FOR MECHANICAL ROYALTY LICENSES The music record industry encompasses record manufacturers, publishers, composers and writers, performing artists and musicians, distributors, and retailers. Thus, it is like most other industries in having a variety of participants, suppliers and distributors. Also, it is no different from dozens of other important industries in that it is subject to the competitive forces and pressures of the market place. There is, however, one notable exception both within the industry and as compared with other industries. The copyright holder of the selection or song, which is the raison d'etre of the industry, is subject to compulsory licensing and has had a legislative ceiling imposed on the price he can receive for his service. The royalty should directly reflect the give and take of the market place, like payments to the other contributors to the finished productnamely, a saleable record.

Short of the rational decision to terminate both the compulsory licensing provision and the statutory royalty ceiling rate, the least that should be done in revising this segment of the legislation is to raise substantially the ceiling rate so as to provide more room for bargaining in the market place. As has

been amply demonstrated, there has been and is considerable bargaining between publishers and record manufacturers, but the range is severely confined by the ancient 2-cent ceiling. If the Congress retains the present provisions for compulsory licensing, then the ceiling rate should serve only one purpose. It should be a rate available only when and if the parties cannot succeed in arriving at a market-place price through bargaining. Clearly, the rate should be high enough to allow and encourage private negotiation, but not so high as to make the compulsory licensing provision meaningless, assuming again that the Congress wants to retain this odd provision. I would urge the Congress to raise the ceiling substantially and allow the fresh air of competition and the free market place to enter into this segment of the music industry.

A higher ceiling would permit wider variation in royalty rates on different compositions. It would supply greater encouragement to would-be composers and writers to enter this profession, and it would provide possibilities of greater rewards to those composers and writers who have proved their creative talents. It is a widely recognized practice to pay higher performance fees to the better known and to the more talented performing artists. In this way the market reflects their greater economic worth. A much more restricted opportunity has been available to the publisher, the composer, and the writer, all of whom must now bargain within the constraints of a 2-cent maximum set in 1909.

With respect to the matter of competition and pricing, one of the most interesting observations was made by a leader in the record manufacturing business, Mr. Clive J. Davis, Vice President and General Manager of CBS Records, who will appear before this Senate Committee tomorrow. In the keynote speech before the NARM convention in Los Angeles, California on March 6, 1967, Mr. Davis made the following remarks:

"However, not surprisingly, the public, as much as any of us, does not want to lose, and the record shows they are willing to pay in order not to do so. We keep hearng that they won't pay more for our product. Frankly, that's nonsense. This is the pat answer-the easy way out.

"Let's look at allied fields of entertainment and see what's done there. There's a hit show on Broadway called "Cabaret" and orchestra tickets are now selling for $12.00. Are there problems at the box office? Certainly not! The show is sold out every night with standing room only. When there is a demand for something, the public will pay for it.

"Where are the Hal Princes and the David Merricks of our burgeoning record business who will price records individually according to the public's demand for it? After all, records too are part of show business.

"At the 500 Club in Atlantic City, the standard cover is $2.00 if the artist is not well-known but get a Sinatra or Sammy Davis in there and the price because of the cost justifiably goes way up-but so do the ropes to hold back the people who are clamoring to get in. When the night club owner risks $25,000 or more a week, business prudence dictates that in order to recoup his expenditure, he must price accordingly. Do we in our industry? Quite the contrary. The records of our hot artists, more expensive to sign and record, frequently become lossleaders and are almost given away. This despite the principle that would say that when you have hit product, you must make money on it to make up for the flops. And do we have flops in our business!

"Supply and demand is the key. Where we have priced albums selectively, sales have not been adversely affected. 'Mame' and 'Cabaret' are each list priced at $5.79 mono and $6.79 stereo. So are others of our recent show albums now that severe investment risks are involved plus heavy recording costs. The flops still don't sell and no discount will help them. But people want 'Mame' even at the higher price. There are almost 400,000 sales to date. 'Cabaret' also is an excellent seller. The Rolling Stones had their Greatest Hits album list at $4.79–$5.79. I understand that sales to date are in excess of 1,000.000 albums, higher than many of their albums with a lower list price."

I submit that Mr. Davis has made a remarkably clear and persuasive argument for market-place determination of royalty rates as well as for record prices. He proposes that there should be selective pricing of recordings. He suggests different prices depending on sales potential. He contends that the very nature of the record business requires that profits must in large part depend on the "hot sellers." Mr. Davis is a prudent businessman-he merely wants to price his product on the apparent willingness of the consumer to pay.

« iepriekšējāTurpināt »