VIII. HISTORICAL COMPARISON Exhibit 20 shows that between 1909 and 1964, the statutory copyright license fee, as a percentage of manufacturers' net selling price, rose from 5% to 15%. According to a study of the copyright law commissioned by the Copyright Office, 1 in 1909 the Congress considered a reasonable statutory copyright license fee to be 5% of the manufacturer's selling price to wholesalers, or "2¢ per part manufactured (e.g., per side of old speed record...)." Today, the copyright license fee is 9.7% of the manufacturer's net selling price for 45 RPM records and 15.0% of the price of monaural popular LP records. These current percentages represent increases of nearly AMOUNTS 200% and 300% over the 1909 level. A 1 increase in the copyright license fee would raise the fee as a percentage of manufacturers' current selling prices from 9.7% to 13.9% for 45 RPM records, and from 15.0% to 21.0% for monaural popular LP records. 1 U. S. Copyright Office; Copyright Law Revision Studies Exhibit 20 STATUTORY COPYRIGHT FEE AS A PERCENTAGE OF RECORD COMPANIES SELLING PRICE TO WHOLESALERS-1909, 1921, 1964 On basis of 2¢ Copyright Fee "Single or Long Playing Popular" 45 RPM Monaural Record Year On basis of 3¢ Copyright Fee (if passed on to wholesalers) 1964 13.9% 21.0% IX. CONCLUSIONS: IMPACT OF INCREASED Exhibit 21 presents conclusions drawn from the earlier analysis. Record companies and record marketers cannot absorb an increase in the statutory copyright license fee. Their margins and profits are already squeezed to the minimum. ་ Therefore, if the copyright license fee is increased, record companies and record marketers would have to respond so as to protect themselves. Record manufacturers would have to take steps such as: reducing the number of risky offerings of new, unknown composers and artists; reduction in the number and length of the selections of music on recordings; fewer recordings of serious and classical music; and, greater use of public domain music. In addition, record manufacturers and record marketers will be forced to pass the increase on to consumers. All of these responses, which seek to lessen increased risks and costs arising from higher copyright license fees, would lead to a restructuring of the industry. There would be a tendency to "concentration" as a result of the increased economic pressure upon weaker record companies and marketers. Moreover, and in any case, copyright holders already receive a greater percentage of industry sales than was originally contemplated by the present law. In addition, copyright holders already receive more of the record industry's dollars than any other creative group associated with record manufacturing. For these, and other reasons presented herein, it is concluded that an increase in the copyright license fee is not appropriate at this time. In fact, consideration should be given to a reduction in the statutory rate. Exhibit 21 IMPACT OF INCREASED RECORD COMPANIES AND RECORD MARKETERS THEREFORE, IF THE COPYRIGHT FEE IS INCREASED: reduction in number of risky offerings involving reduction in number and length of pieces - fewer recordings of serious and greater use of public domain music ●Record companies and marketers will be forced to pass the increase on to consumers There will be a restructuring of the industry and tendency to concentration as a result of economic pressures upon weaker record companies and record marketers COPYRIGHT HOLDERS ALREADY RECEIVE GREATER PERCENTAGE OF INDUSTRY SALES THAN CONTEMPLATED BY PRESENT LAW COPYRIGHT HOLDERS ALREADY RECEIVE MORE MONEY AND A LARGER SHARE OF INDUSTRY DOLLARS THAN: • artists • supporting talent ⚫ record companies ADDENDUM то STATEMENT OF JOHN DESMOND GLOVER BEFORE PATENTS, TRADEMARKS, AND COPYRIGHTS COMMITTEE ON THE JUDICIARY UNITED STATES HOUSE OF REPRESENTATIVES June, 1965 This addendum provides factual information with respect to certain arguments regarding H. R. 4347, Sec. 113 (c) (2), relating to: 1. relative effects of 1909-1965 price levels upon copyright holders and record companies; 2. 3. actual playing times of recorded music and the extent to which the copyright license fee |