I. SUMMARY AND INTRODUCTION The Argument Against Increasing the Statutory License 1. An increase would be inequitable. Copyright holders (composers and publishers) are getting substantially greater financial gains out of the phonograph record industry than the companies themselves; greater than performing artists; greater than the supporting talent. Copyright holders are now being paid far greater dollar fees than ever before. Copyright holders are receiving a far greater percentage of the industry's sales dollar than was true in 1909, when the present law was designed to give them 5% of the manufacturer's selling price. 2. An increase would have grave impact on the entire industry, on manufacturers, artists, performing talent, distributors, retailers, and even on copyright holders, themselves. The proposed increase in copyright license fees would call for an increase in annual dollar payments several times the size of all profits of all companies. This would generate irresistible pressure tending to squeeze many companies, especially smaller companies, out of the industry entirely. Similar pressures would operate on marketers, i. e., wholesalers and retailers. The level of activity of the industry and the number of new recordings released would be seriously depressed. There would be unleashed strong forces operating to restructure the industry, even to impair competition. 3. Prices of recordings to the public would rise materially. In the aggregate, the proposed increase in statutory copyright fee would cost the public possibly $30 million per year. The variety of musical offerings would be restricted and the quality of musical offerings would deteriorate. Composers, especially new, unknown ones, would find fewer opportunities for having their works recorded. Exhibit 1 PRIMARY CONSIDERATIONS IN EVALUATION OF STATUTORY COPYRIGHT LICENSE FEE ■Economic equities ■Economic pressures on producers and marketers Cost and character of recorded 52-380 O-66-pt. 2-9 · II. ANATOMY OF THE RECORD INDUSTRY The record industry includes thousands of businesses, organizations and individuals who perform a wide variety of services. These elements of the industry are linked together in an intricate network of relationships. These relationships have grown up over the years, reflecting workings of the present copyright law, approaches found to be workable, and changing economic conditions and technology. It is a responsive industry, reacting with speed to changing tastes, market conditions and technology. An increase in copyright license fees would have a major and a seriously disrupting effect upon the whole industry. Many units in the industry -- independent distributors, jobbers, and small record companies particularly would find it difficult to stay in business. The nature of the industry's offerings would be greatly altered. Forces would be set in motion to restructure the whole industry. See Exhibit 2. |