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Exhibit F -- Payments to Copyright Owners would Go Up $47 Million
The finding is explained on pages 56-60; the underlying data are to be found in Exhibits 6 and 7, which are discussed in this appendix. Suffice it to say here that the $47 million figure does not assume that all licenses would be paid at 3. It is based on the study finding that the existing rate structure, with standard discounts off the statutory rate, would prevail -- but at a higher plateau for all rates. This study finding is explained in Section 11. E. of the full statement.
Note that the increase in mechanical royalties paid would be more than the sixple 50$ achieved by raising the rate from 24 to 3¢ because of the effect of the proposed playing time provision in Sec. 115 of H.R. 2223. (See Exhibit 6.)
Exhibit G -- Annual Cost to Consumers Could Go Up_By_$100 Million
Calculation of the increase -- more precisely $97.6 million -- is shown in Exhibit 10, page 67. Note that the increase to Consumers is considerably sore than the $47 million increase to recording companies. The logic for this is explained in this Technical Appendix under Exhibit 9.
These data come directly from Exhibit 13 of the main written report, p. The source of that exhibit, a study conducted by Cambridge Research Institute in 1972, is discussed later in this appendix under "Exhibit 13".
Exhibit I -- Rates Paid are Statutory Rate and Standard Variations
These percentages are computed directly from Exhibit 21, p. 118, which is discussed in full later in this Technical Appendix.
Exhibit J-- In 1974 as in 1963 Tunes Were
Licensed at 24 or Standard Variations
The right-hand side of this exhibit is computed from Exhibit 21, p. 118. There, .it will be seen that 21 of the 2,593 tunes studies which had paying
This amounts to
licenses, were paid at rates other than standard variations. 0.8% of the tunes sampled.
The left-hand side of Exhibit J is taken from the 1965 Statement of John Desmond Glover on H.R. 4347 Section 113 (c) (2).
Exhibit K -- No Economic Justification for an increase
This exhibit restates the conclusions of Exhibit A.
This concludes the section of the Technical Appendix covering the Summary exhibits.
FULL STATEMENT EXHIBITS
This section of the Technical Appendix documents in detail the sources and methodology for the exhibits in the full statement, pp. 33-118.
Exhibit 1 -- STATUTORY LICENSE ROYALTIES AND RECORD
COMPANY PRICES: 1909 vs. 1974 Sources for the price information cited in the exhibit are given in the footnotes to the exhibit. The financial survey cited in footnote "b" is explained in detail later in this appendix under "Exhibit 5".
Exhibits 2&3 -- INCOME TO COPYRIGHT ONVERS FROM
RECORDINGS, 1973 vs. 1963 The data relating to mechanical royalties are explained in the "Sources" section at the bottom of Exhibit 3. The two CRI surveys that provided raw data are briefly described in footnote "a" of Exhibit 3, and are more completely discussed later in this appendix under "Exhibit 5".
Copyright owners' performance fee income from recordings was estimated as follows:
• Of $37.5 million (FCC figures) in music license fees paid by
radio stations and networks to copyright owners in 1973, 90%
produced sound recordings;
stations and networks in 1923 to copyright owners, 10% or $4.8
general and background music, live symphonic and concert music,
estimated to be due to commercially produced recordings;
accountable for about half of the ASCAP total for background
These estimates sum to $44.4 million in copyright owners' income from performance fees attributable to sound recordings, an increase of 283% over the level of 1963, as reported in the 1965 Glover Statement.
In terms of the estimated mechanical royalties, it will be noted in footnotes "a" and "b" of Exhibit 3 that there are two estimates provided. The footnotes indicate that the two estimates are from different surveys, and it explains our rules for the use of each. The lower estimate ($77 million in 1973 and $79 million in 1974) is from a lengthy financial survey which was first conducted by CRI in 1973 and later updated in 1974 and 1975. It is discussed in detail below under the notes to Exhibit 5. The higher estimate is from a short, special 34-company survey which CRI conducted in 1975 in order to obtain the most recent information on mechanical royalties paid. It was conducted as follows:
A two-question survey was sent to 96 record companies
On the next four pages following, the memorandum introducing the short survey, the one-page questionnaire, the names of the respondent firms, and the raw survey results are provided.
December 2, 1974
Der sig recent Senate hearings on the Copyright Revision Bill, q***t.ant were talked about the total amount of mechanical fees paid by the record industry. In order to illustrate the severe impact on the record industry of raising mechanical lees from 2¢ (under existing €6987.ght law to } runder the copyright bill passed by the Senate in Segrem.ber 19°*', there is an urgent need to collect statistics on the Tree Manical feet paid by as many record compan.e. as possible. Could you, the relore, please fill in the attached questionnaire and
The fellowing procedure has been established on your company's
for your hles and send one copy to the CPA form of