Page:Copyright Law Revision (Senate Report No. 94-473).djvu/93

 opportunities for having their works recorded; that record manufacturers would have to avoid risks on new and unusual compositions, reduce the number and length of selections, record fewer serious works, and rely more on the public domain for popular material. A letter to the committee from the Consumer Federation of America voiced similar concerns.

In response to these predictions, the songwriters and publishers argued that the identical predictions were made by the same record industry consultant at the House hearings 10 years ago about the dangers of a 12 cent per record increase, and that since that time it is claimed the industry has increased prices by more than $3.00 without a single one of these predictions about the fate of recorded music coming true. As additional indications of the record industry’s own lack of concern about increased prices, they contend that the industry refused to pass on to the consumer the savings made possible by the excise tax repeal of 1965 and raised monaural prices by $1.00 to match stereo prices in 1967. The maximum increase possible of one cent per song or ten cents per record under a new 3 cent ceiling, they add, would be an insignificant fraction of the amount by which the industry has increased prices in the last 10 years and still give the creators of the music a smaller share of the current price per recorded song than 2.5 cents would have given them a decade ago. Music consumers represented by the National Federation of Music Clubs have also supported a higher ceiling as a means of encouraging the writing of more and better music.

4. The Statutory Fee As A Ceiling Or As An Established Rate.—One of the principal arguments of the copyright owners was that, in contrast to record manufacturers whose prices are not fixed and who are not obliged to pay copyright owners any minimum amount, the authors and publishers are deprived of any right to bargain above the two-cent ceiling. They stress that the statutory rate is merely a maximum: the record manufacturer can also negotiate for less, but the copyright owner can never ask for more. The actual average royalty paid, according to a music publisher’s survey, is 1.62 cents, down 34 percent in real purchasing power from the 1.51 cent average of a decade ago. The authors and publishers thus stress that an increase in the ceiling will not automatically increase all royalty rates, that their bargaining power versus the giants of the record industry will still keep most royalty rates below any new ceiling, and that increased royalties will be obtained only for those songs with sufficient appeal to enable free market forces to bolster their rate of return above the present artificially low level. Thus they seek not an automatic rate increase but room to negotiate.

On the other side, the record manufacturers argued that as a practical matter the statutory rate establishes the fee actually paid in most instances, and that for business reasons, it is impossible for individual companies to bargain for special discriminatory rates for particular compositions. They cited a survey of some 2,600 selections issued by two major record companies during the greater part of 1974, which found that some 81 percent of all copyright licenses (as distinguished from phonorecords sold) were at the two-cent rate, and that of the remaining 19 percent, the vast majority were for budget, club and