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126

FULL STATEMENT EXHIBITS

This section of the Technical Appendix documents in detail the sources 26 methodology for the exhibits in the full statement, pp. 15-118.

LIDIO 1 -- STATUTORY LICENSE ROYALTIES AND RECORD

CAME ANY PRICES. ) vs. ii Sources for the price information cited in the exhibit are given in the foethotes to the exhibit. The financial survey cited in footnote orga 13 expened in detail later in this appendix under "Exhibit 5".

£x*:bits ?! 3. Nyere to copyICHT ONTOS

FROM ale von uns vs. isos The data relating to mechanical royalties are explained in the "Sources" natin at the bottom of Exhibit 3. The two CRI surveys that provided rav dets me briefly described is footnote "q" of Exhibit S, and are more completely dann later in this appendix under "Exhibis 5".

Cerrig ert' porternance fee income from recordings vas estimated as

• Of 537 5 allion (FCC figures) in music license fees paid by

radio stations and networks to copyright owners in 19'3, 901
or ['11 111::on was estimated to be attributable to commercially

produced sound recording.
• Of 147.1 x 1llon (FCC fi pures) in music license fees paid by TV

Plations and networks in 1973 to copyright owners, 101 or $48
kiilton vas conservatively estimated to be due to the use of

and recordings.
• 0f 119.4 million in ASCAP receipes in 1973 due to nonbroadcast

eneral and background music, live symphonic and concert music,
and royalsses from forela societies, 201 or $5 9 81111on was

mtimated to be due to comercially produced recordings,
• linally, it was estimated that it and se sac together also were
*countable for about mail of the ASAP total for background
C's, or about $; ai...

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These estimates sum to $44.4 million in copyright owners' income from performance fees attributable to sound recordings, an increase of 2838 over the level of 1963, as reported in the 1965 Glover Statement.

In teras 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 estinate 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
in early 1975. The companies comprised all those member
firas of the Recording Industry Association of America
plus an approximately equal number of presumed prospective
members. Thirty-four companies responded. Those who did
not respond did so for a variety of reasons -- some were
no longer in business, others had merged or had been
acquired, and many were inactive and had no sales during
the period. When compared with RIAA industry sales esti.
mates, it appeared that the 34 respondents represented
close to 981 of industry sales -- and hence, mechanical
royalties pa id. Thus the figure of $83 million for
mechanical royalties paid in 1974 is a highly reliable
number.

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on the next four pages following, the nemorandum introducing the short survey, the one-page questionnaire, the nares of the respondent firms, and the tax survey results are provided.

128

MEMORANDUM

December 2, 1974

TO:

Record Companies

FROM:

Cambridge Research Institute, Cambridge, Massachusetts
Telephone: (617) 492-3800

SUBJECT:

1973 and 1974 Statistics on Mechanical Fees Paid by the
U.S. Record Industry

During recent Senate hearings on the Copyright Revision Bill, questions were

were raised 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 fees from 2¢ (under existing copyright law) to 3¢ (under the copyright bill passed by the Senate in September 1974), there is an urgent need to collect statistics on the mechanical fees paid by as many record companies as possible. Could you, therefore, please fill in the attached questionnaire and return it by January 15.

The following procedure has been established so your company's financial data will be handled in a confidential manner:

After you have completed the enclosed form keep one copy
for your files and send one copy to the CPA firm of
J. K. Lasser & Company, 666 Fifth Avenue, New York,
New York 10019. (You may use the preaddressed envelope
that is enclosed. )

As you will notice, your forms have been pre-coded with
a company number known only to Cambridge Research
Institute. The CPA firm of J. K. Lasser & Company will
not know the name of your company. In this way, your
company's name will not be associated with your financial
data.
The financial data you send to the accountants will be
combined with data from other firms, which will prevent
disclosure of individual company information. Your
reporting forms will be destroyed.

97-786 0.76 . pl. 3. 10

129

RIAA SURVEY OF MECHANICAL FEES
PAID BY RECORD COMPANIES IN 1973 AND 1974

Company

Code Number

Send form to:
Ms, Millicent Hauser
J.K. Lasser & Co.
666 Fifth Avenue
New York, N. Y. 10019

Questions may be referred to:

Mrs. Carol Ceri
Cambridge Research Institute
Telephone (617) 492-3800
Cambridge, Mass,

Only financial statistics on record and tape operations in the

United States should be supplied,

Jan-June

1973

(in $1,000's) July-Dec. Jan. - June

1973 1974

July-Dec,

1974*

Net Sales of Records and Tapes

(All domestic and export sales
to retail or wholesale organiza -
tions, including sales to but not
by record clubs, and including
sales through any wholly owned
sales subsidiary. From gross
sales, should be deducted returns,
exchanges, allowances, cash
discounts, state éxcise taxes,
and bad debts, including bad
debts arising from record club
operation. )

Mechanical Fees

(All mechanical fees paid to music copyright holders either directly or through agents. )

. These figures can be estimates if necessary, but please indicate if they are.

PLEASE MAIL THIS INFORMATION BY JANUARY 15, 1975.

130

Record Companies Which Responded to the Questionnaire Entitled

"RIAA SURVEY OF MECHANICAL FEES PAID BY RECORD COMPANIES IN 1973 and 1974"

ABC/Dunhill Records
Alshire International, Inc.
A & M Records, Inc.
Ansonia Records
Arista Records

Atlantic Recording Corp.
Bee Gee Records
Buddah Records
Capitol Records, Inc.
Challenge Records

Cinnimon, clo Goldband Records
Columbia/Records Group
Disneyland/Vista Records
Elektra / Asylum/Nonesuch Records
GNP Crescendo Records

GRT Corporation
Hickory Records, Inc.
Ic ka - Delick-Music & Records Corp.
London Records
Longines - Symphonette Recording Society

MCA Records, Inc.
Mill City Records
Nashboro Records
Phonogram, Inc.
Pickwick International, Inc.

Polydor, Inc.
RCA Records
Savoy Records, Inc.
Sussex Records
20th Century Records

United Artists Music & Records Group, Inc.
Thomas J. Valentino, Inc.
Warner Bros. Records
Word Records

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