Copyright and Home Copying: Technology

Challenges the Law

October 1989

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spread use, homemade copies will not just be very goodthey can be perfect

reproductions of the originals. Home copying is becoming much more common;

for instance, the proportion of people who make home audiotapes has doubled

in the last 10 years. Copyright owners are concerned, and claim that home copying displaces sales and undermines the economic viability of their industries. They

fear that the ability to make perfect copies will increase home copying even more.

This report first examines home recording technologies. Then—focusing

primarily on audiotaping—we examine the ambiguous legal status of home copying. Our report considers the economic effects that home audiotaping may have

on the recording industry, contrasted to the effects that restricting home taping

might have on consumers. Finally, we identify a range of actions that either Congress or the industry might pursue.

Included in our report are the results of a national survey of home taping and

copying behavior conducted for OTA in the autumn of 1988. In this survey, 1,500

members of the public responded to a range of questions about their own audioand video-taping behaviors and their attitudes toward various policy approaches

related to home taping. The Subcommittee on Courts, Intellectual Property and

the Administration of Justice of the House Committee on the Judiciary and the

Subcommittee on Patents, Copyrights and Trademarks of the Senate Committee

on the Judiciary initially requested the report. This request was joined by the

Ranking Minority of the House Committee on the Judiciary. Interest in the study

was also expressed in a letter from the Chairman of the House Committee on Energy and Commerce and the Chairman of the Subcommittee on Commerce, Consumer Protection and Competitiveness of the House Committee on Energy and

Commerce.

OTA appreciates the participation of the advisory panel, survey working group,

Federal agency officials, and interested citizens without whose help this report

would not have been possible. The report itself, however, is the sole responsibility of OTA, not of those who so ably assisted us in the assessment and its critical

review, or of the congressional committees who requested or endorsed the undertaking of the study.
Jason S. Berman

President

Recording Industry Association of America

Brenda Dervin

Chairman

Department of Communications

Ohio State University

David Fishman

Senior Staff Consultant

Arthur D. Little, Inc.

Jack Golodner

Director

Department of Professional Employees

AFL-CIO

Michael H. Hammer

Director

Communications Policy Development

Time Incorporated

Glen H. Hoptman

Editor-in-Chief, Optical Publishing

Smithsonian Institution

Judith K. Larsen

Director of Primary Research

Dataquest

Judith Lichtenberg

Research Scholar

Center for Philosophy and Public Policy

University of Maryland

William Livingstone

Contributing Editor

Stereo Review Magazine

Peter Menell

Associate Professor of Law

Georgetown University Law Center

David Mouon

Chairman

Music Production and Engineering

Berklee College of Music

Peter Rothbart

Assistant Professor of Electronic Music

Ithaca College School of Music

Gary J. Shapiro

Staff Vice President

Government and Legal Affairs

Consumer Electronics Group

Electronic Industries Association

Mark Silbergeld

Director of Washington Office

Consumers Union

Russell M. Solomon

President

MTS, Inc.

Patrick A. Weber

Director/R&D

MCA Records

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members. The panel does not, however, necessarily approve, disapprove, or endorse this report.

OTA assumes full responsibility for the report and the accuracy of its contents.

iv
Science, Information, and Natural Resources Division

James W. Curlin, Program Manager’

Communication and Information Technologies Program

Fred W. Weingarten, Program Manager2

Communication and Information Technologies Program

Project Staff

Joan D. Winston, Project Director3

Karen G. Bandy, Analyst’

Mark Nadel, Analyst’

Darlene Wong, Research Analyst

Congressional Research Service Contributor

Douglas R. Weimer

American Law Division

Administrative Staff

Elizabeth Emanuel, Administrative Assistant

Karolyn Swauger, Secretary

Jo Anne Price, Secretary

1 As of 4/89

2 Senior Associate as of 1/89

3As of 8/88

4 Project Director 2/88-8/88, on leave 8/88-12/88

5 As of 3/89

v
Ohio State University University of Maryland Philip Wirtz

Martin Fishbein

Department of Psychology

University of Illinois

Judith Larsen

Director of Primary Research

Dataquest

Lewis Lipnick

Principal

Your Silent Partner

Steve MacGregor

Vice President

Diagnostic Research, Inc.

Associate Professor

Department of Management

Science

George Washington University

Robbin Ahrold

Broadcast Music, Inc.

Joe Alen

Copyright Clearance Center

David E. Altschul

Warner Bros. Records, Inc.

Wilhelmus Andriessen

Conseil Europeen de l’Industrie

de la Bande Magnetique

Russ Bach

CEMA - Capitol Records

Lew Bachman

The Songwriters Guild

James Barrett

Barrett’s Audio & Video

James A. Berkovec

University of Virginia

Paul Berry

Canadian Musical Reproduction

Rights Agency Limited

Peter Beruk

Software Publishers Association

Stan Besen

Columbia University

Marv Bornstein

A&M Records

Timothy J. Brennan

George Washington University

Yvonne Burckhardt

International Federation

of Musicians

Robert Cassler

Copyright Royalty Tribunal

Reviewers and

Ralph E. Cousino

Capitol Industries

Michael Cover

Contributors

EMI, Inc.

Recording Industry Association

of America, Inc.

Paula Cranston

SESAC, Inc.

Jeff Cunard

Debevoise & Plimpton

Linda B. Cutler

Eidak Corp.

Donald P. Dulchinos

National Cable Television

Association

Joe Finney

National Center for Health

Statistics

Ronald Freed

Music Publishers’ Association

of the U.S.

Ray Gianchetti

National Association of

Recording Merchandisers

James L. Goldberg

Abram, Westermeier, Goldberg,

P.C.

National Association of Retail

Dealers of America

Michael Greene

National Academy of Recording

Arts and Sciences

Jill Grisco

The Washington Post

Michael Grubbs

Tandy Electronics

Dan Hochvert

NYNEX

Brad Kingsbury

Peter Norton Computing, Inc.

David E. Kronemyer

Capitol Records, Inc.

Stan Liebowitz

Department of Economics and

Business

North Carolina State University

Sandra Lockhart

Car Audio Specialists Association

John W. Lyons

National Institute of Standards

and Technology

Frannie Martis

MTS, Inc.

James Massey

National Center for Health

Statistics

John T. McGuire

Screen Actors Guild

Al McPherson

Warner Bros, Records, Inc.

Gloria Messinger

American Society of Composers,

Authors, and Publishers

Edward D. Murphy

Harry Fox Agency

Dave Newberg

Capitol Records

Ian Novos

University of Southern

California

vi Continued on next page
Joseph Oldham

Popular Mechanics

Edwin Outwater

Warner Bros. Records,

Marybeth Peters

Office of the Registrar

U.S. Copyright Office

Skip Pizzi

National Public Radio

David Pushic

Inc.

Optical Disc Mastering

Helen Rena

Legal Department

American Federation of

Musicians

Irene Robadey

International Secretariat of Arts,

Communications Media and

Entertainment Trade Unions–

FIET

Hilary B. Rosen

Recording Industry Association

of America, Inc.

Garth Saloner

Sloan School of Management

Massachusetts Institute of

Technology

John Boyle, Principal Investigator

Schulman, Ronca, & Bucavalas,

Inc.

William Johnson

University of Virginia

Michael Katz

University of California at

Berkeley

Fred Mannering

University of Washington

Ian Novos

University of Southern California

Eric Schwartz

U.S. Copyright Office

Steven Schwartz

Music Distribution Service

Molly Seagrave

International Cablecasting

T’echnologies

Carl Shapiro

Woodrow Wilson School

Princeton University

Cary H. Sherman

Arnold & Porter

Rick Shoemaker

MCA Music

Gregory Sidak

Federal Communications

Commission

Cathy Slesinger

NYNEX

Ken Small

University of California

at Irvine

David Stebbings

CBS Records Technology

Group

Contractors

Carl Shapiro

Princeton University

Leigh Tripoli

Editor

Referees for Economic

James A. Berkovec

University of Virginia

Stan Liebowitz

Analyses

North Carolina State University

Garth Saloner

Massachusetts Institute of

Technology

g, 

Ana Thorne

Peter Norton Computing

Jean Loup Tournier

SACEM/SDRM

Kenneth Train

Cambridge Systematic

Harold Vogel

Merrill Lynch Capital

Markets

Michael Waldman

University of California at

Los Angeles

Howard L. Wattenberg

Marshall Morris Wattenberg

& Platt

George David Weiss

The Songwriters Guild

Clifford Winston

The Brookings Institution

Sanford Wolff

American Guild of Musical

Artists

David Sappington

Bell Communications Research

Ken Small

University of California at Irvine

Kenneth Train

Cambridge Systematic, Inc.

Michael Waldman

University of California at

Los Angeles

vii
Chapter 2. Technological Change and Home Copying. . . . . . . . . . . . . . . . 37

Chapter 3. Legal Aspects of Copyright and Home Copying. . . . . . . . . . . 65

Chapter 4. An Overview of the U.S. Record Industry. . . . . . . . . . . . . . . . 91

Chapter 5. Copyright Royalties for Music and Sound Recordings. .. ...103

Chapter 6. The OTA Survey. . . . . . . . . . . . . . . . . . . . . . ...............139

Chapter 7. Economic Perspectives on Home Copying. . ..............169

Appendix A. Survey Development and Review. . . . . . . . . . . . . . . . . . . . . 211

Appendix B. Survey Questionnaire. . . . . . . . . . . . . . . . . . . . . . .........217

Appendix C. OTA Survey Tables. . . . . . . . . . . . . . . . . . . . . . ...........253

Appendix D. List of Contractor Reports. . . . . . . . . . . . . . . . . . . . . . . . ...293
Chapter 1

Summary, Issues

and Options
Page

SUMMARY ● . ● ● $ s ● ● ● . ● . . .*** ***. .m.   .0**  **. . m*****************

Reasons for Concern ..*o**. *.o * o * * . . * . * * . * **.*....* ● .9**** ●   3

Contested Issues . . . ● ● . ● . ● ● ● ● . . ● ● ● ● ● ● ● ● . ● ● ● ● .O . . . ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 5

Congressional Role . . . . ● .** ..* . . . . . . . . ● .9**.** ● .9*.*.. ● **9..** ● * 14

POLICY CHOICES AND OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Introduction ..*. *.. ... *OeOo.Oo *oo. o.** ..*o*** .o. .o. **. o*** *o* o 14

Fundamental Copyright Policy Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Choices for Congress ● .*. ***m *.** **** 9*. **** *.. **. *b * * * *9****.** 17

Policy Options . . . . . . . .. . ** 9* **** 9*0. *.. ****   ..**  9***e* e 20

CONSIDERATIONS FOR POLICY IMPLEMENTATION . . . . . . . . . . . . . . . 21

Distinguishing Among Types of Home Copying . . . . . . . . . . . . . . . . . . . . . 21

Technological Copy Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Compulsory Licenses . . . . * * . . * . * * . . . * . * . * * . * * . . . * . . * * * . *...**..* 26

Boxes

Page

1-A Questions Concerning Artists’ Rights and Private Use . . . . . . . . . . . . . . 17

l-B. Industry Agreements and Antitrust ● * * * . . . . . . . . . . . . . . . . . . . . . . . . . 19

l-C. Attributes and Uses of Home Copies ● **. *9. ..** *9990 *****0999*.* 22

l-D. Parameters of Home Copying ..** .,** *.*. **. *m. .. **********0*0. 24

l-E. Industry Agreement Concerning DAT ● **. ... ... .**. *.** o* *o.... * 28
SUMMARY

Reasons for Concern

A 1988 OTA survey found that 4 in 10 of a

nationally representative sample of Americans over the age of ten had taped recorded

music in the past year. The survey results

showed that Americans tape-record individual musical pieces over 1 billion times per

year. Much of this home audiotaping was for

the purpose of copying music from records or

compact discs to audiocassettes to be played

in the car or in portable cassette players. OTA

found that the public–those who had taped

and those who had not—believe it is acceptable to copy recorded music for one’s own use

or to give to a friend as long as the copies are

not sold.

But copyright owners of music and sound

recordings consider home audiotaping to be a

problem. They believe that taping cuts into

sales of prerecorded music and reduces royalty payments to songwriters, music publishers, and performing artists. Recent advances

in audio-recording technology have made it

easier to make high-quality home copies.

In 1986, Japanese and European manufacturers announced their intention to market

consumer-model digital audiotape (DAT) recorders in the United States. DAT technology

represents a significant advance over conventional, analog tape recorders. The sound quality of DAT recordings is superior, and DAT recorders can produce copy after copy with

virtually no degradation in fidelity. The debate co

ceg ad ts pact ooe

copying is one of a growing number of copyright issues identified in a 1986 OTA report on

intellectual property.2

Since enactment of the Copyright Act of

1976, over 400 bills have been introduced in

Congress to change the copyright law; many

of these attempted to deal with a growing

range of copyright issues related to technology. For example, computer software, semiconductor chips, privately owned satellite

dishes, online databases, and audio- and

video-cassette recorders, have all prompted a

variety of proposals to deal with what copyright proprietors perceive as not only piracy of

their intellectual property but an undermining of their economic viability.

Digital representations of music, video, and

other types of information and entertainment

for home use cause copyright owners the most

concern (see ch. 2). Although some current

consumer-model analog audiotape recorders

can produce very high-quality copies (especially from compact discs), the quality of successive generations of copies degrades rather

quickly. But digital recorders, such as DAT

equipment or the forthcoming erasable/recordable compact disc technology, enable the

public to make successive generations of virtually perfect copies.

Music in digital form can be easily edited

and manipulated, and the music can be copied

and stored on a number of different media —

tape, computer disk, compact disc, etc. Special, error-correction circuitry can make

physical imperfections in the recording, like

1A royalty is a payment made to a copyright holder or performer for the use of his property. Copyright in the musical composition is

usually held by the songwriters/composer and music publisher. Recording companies pay “mechanical” royalties to copyright owners

of musical compositions based on the number of recordings sold. Copyright in the sound recording is usually held by the recording

company. Recording companies earn revenues from the sale of a recording and pay recording artists their royalties from these revenues (see ch. 5 for a discussion of royalties for music and sound recordings).

W.S. Conwess, C)mce of Technology Assessment, Intellectual Property Rights in an Age of .Electmnics and lnfo~ution, OTACIT-302 (Melbourne, FL: Kreiger Publishing Co., April 1986).

3
Photo Credit: Optical Disc Mastering

Analog information can be coded as a series of ones and zeros.

dust or scratches, imperceptible during playback. Digital representations offer advantages

to consumers, but many copyright holders are

concerned that convenient, consumer-model

digital recorders will greatly encourage home

copying, and many recording companies,

songwriters, and music publishers fear that

digital audio copying will greatly reduce sales

and royalties.

The primary focus of this study is home

audiotaping. In it, we examine the nature and

extent of home audiotaping and consider the

impacts it may have on recording-industry

revenues, contrasted with consumer impacts

should home copying be restricted. We also

briefly examine current home videotaping

practices. This report looks beyond near-term

potential impacts of DAT to an intellectual

property concept called private use, of which

home copying is one kind,3 and to technological trends that will become the basis for future debates over personal use of copyrighted

material.

3Examples of private use include “time-shifting” videotaping from television, copying a magazine article, or making home

audiotapes from broadcast or prerecorded material. (See ch. 2 for a discussion of technological change and private use and ch. 3 for a

legal discussion of home copying and other private uses; see also ibid., pp. 193-201. )
gpyg

Goals of Copyright –American copyright is

sanctioned by the Constitution as a form of

protection for authors against unauthorized

copying of “original works of authorship. ”4

The copyright proprietor is given the exclusive right to use and to authorize various uses

of the copyrighted work: reproduction, “derivative use)” distribution, performance, and

display. Violation of any of the copyright owner’s rights may result in an infringement-ofcopyright action. The copyright owner’s

rights in the work are neither absolute nor unlimited in scope, however. For instance, the

duration of copyright is limited (e.g., the life

of the author plus an additional 50 years, or 75

years for a work “made for hire”).

Copyright was developed for the promotion

of intellectual pursuits and public knowledge,

primarily for the benefit of the public at

large.5 Benefits accrue to the public from the

creativity of authors, and the limited monopoly granted authors is a stimulant to ensure

that creativity. Without a public benefit arising from the copyright system, the grant of a

monopoly would not rejustifiable. Thus, there

is a balance between the rights of copy-right

proprietors and the rights of the public. Arguments that equate copyright with royalty income run counter to this concept and appear

Legal Status of Home Copying as Private

Use-In this report, OTA defines “home copying” (of copyrighted materials) as an essentially private, noncommercial activity, so that

“home copies” includes copies shared with or

given to friends, but not homemade copies that

are bought or sold. This definition is consistent with the definition of private use in the

1986 OTA report on intellectual property.6

Thus, home copies are used privately within

the household (including personal vehicles)

and are not used for implicit or explicit commercial purposes. Admission is not charged

and users are a household and its normal circle of friends, rather than the public. “Homemade” copies that were subsequently used for

commercial purposes or public performances

would not be considered home copies. This

definition appears to be in line with public

opinion. Private use is sometimes referred to

colloquially as ‘(personal use,” “private copying, ” or “home use. ” In this report, OTA uses

“home copying’ to refer to one form of private

use.

The problem of private use arises because

its legal status is ambiguous. Current legislation and case law offer meager guidance as to

whether copyright proprietors’ rights extend

over private use.7 While language in the House

Report8 accompanying the 1971 Sound Recordings Amendment to the (former) copyright law made it clear that Congress intended

4

17 U. S. C., sees. 102, et seq. ( 1982)

5A fllndamenta] ma] of Cr)pyright, is to prornot,e the public interest and knowledge – the “progress of %ience ~d the useful Ms. ”

(U.S. Constitution, Art. I, sec. 8, cl. 8.) A directly related objective is t he promotion and the dissemination Of knowledge to t he public.

6The 1986 OTA report defined przuute use as “the unauthorized, uncompensated, noncommerci~, and noncompetitive use of a copyrighted work by an individual who is a purchaser or user of that, work. ” Here “use” includes copying and “unauthorized” does not

necessarily mean “illegal” – it means” without consent.“ “Noncompetitive” means that the fruits of private use are not sold commercially. (OTA-CIT-302, op. cit., footnote 2, p. 194. )

T~though u. s cou~s have t=nc~]~ on t. resolve some as~cts of home use of videocassette recorders, these decisions have been

relatively narrow in scope and have applied the fair-use doctrine, absent other statutory guidance. OTA considers that in light of its

ambiguous legal status, applying the fair-use doctrine to private use is premature (see the section on fair use that follows).

8u,s, ConWess, House Comm itt= “n the Judiciw, sound Rem& Lngs: Report Acmmpanying S.646, serial No. 92-487, September

1971, p. 7.
intent (see ch. 3). The Recording Industry Association of America, Inc. (RI-M), for instance, considers that the 1971 amendment

was made irrelevant by the “general overhaul” in the Copyright Act of 1976.10 The Electronic Industries Association (EIA), on the

other hand, considers that the 1976 legislation did nothing to negate “the principle that

home taping from broadcasts or prerecorded

materials was not an infringement [of copyright]. ”11

Fair Use and Home Copying– Some uses of

copyrighted works, such ascertain copying for

the purposes of criticism, news reporting, research, teaching, or scholarship, are “fair

uses,’ ) not copyright infringements. Fair use is

a defense to a claim of copyright infringement

that is codified in the 1976 Copyright Act and

interpreted by the courts. Courts determine

whether an instance of copying is “fair use” by

taking into account the purpose and character

of the copying, the amount and extent of the

work copied, the nature of the original work,

and the effect of the copying on the potential

market for or value of the work. 12 Many consider the doctrine of fair use to be the “safety

valve” of copyright law and sufficiently adaptable to deal with home copying and other consequences of technological change.

Even though the EIA (for example) maintains that the current legality of home copying

legislation making its legal status more explicit is not needed.13 The recording industry,

on the other hand, considers that home copying is an infringement under the current law

and that, in the face of “massive sales displacement and loss of revenues,” legislation

for additional enforcement is needed to make

copyright protection “more than an empty

right.” 14 

General application of the fair-use doctrine

to home copying may be premature because

home copying is a private use and the legal

status of private use is ambiguous.

Absent other statutory guidance, however,

fair use has been applied to legal cases involving home copying. American courts have examined home copying with videocassette recorders (VCRs). In 1984, after a series of

conflicting lower court judgments, the Supreme Court determined that under certain

circumstances, the taping of a video work in

its entirety for watching later would be allowable under the doctrine of fair use. The scope

of the Supreme Court’s holding was expressly

limited to home video recording of over-theair, commercial broadcasting for time-shifting purposes. The holding did not address the

taping of cable or pay television, or the issue of

“library building” of recorded programs.15

gu.s. ConWess, House Committ= on the Judiciary, Report Accompanying S.22, Serial No. 94-1476 Septembr 19’76.

10H. ~=n, ~]etter t. J. Winst on) oT~ May 2, 1989 (enc]osure with comments on drti Ch. 5, p. 2). W’S membership includes the major U.S. recording companies.

1 IGary J. Shapiro, EIA, letter to D. Weimer c/o OTA with comments on drafl ch. 5, Apr. 28, 1989, p. 3. EIA’s membership includes

consumer-electronics and blank-tape manufacturers.

Iz(_+riteria t. & consifier~ (by the Coufis) in determining whether a c]~med infringement is actud]y a “fair use” are given in SW.

107 of the Copyright Act of 1976 (Title 17 U. S.C. ). The Act specifies other limitations on exclusive rights of copyright holders.

‘%-h-y J. Shapiro, EIA, letter to D. Weimer with comments on draft ch. 5, Apr. 28, 1989, pp. 1, 4-5.

14H ~sen, RIAA, ]etter t. J. Winston) OTA, May 2, 1989 (enclosure with comments on drall ch. 8, pp. 1-’2; enclosure tith comm

on dr& ch. 9, p. 1).

ISUnLuema/ ci~s~~~~, Inc. “. SonyCoW. of~e~m) 480F. Supp. 429 (D. C!. cd. 1979), WU’d, 659 F. 2d % (9th Cir. 1981), mu’d, 464

Us. 417 ( 1984).
right--All U.S. copyright law, including the

Copyright Act of 1976, proceeds on the assumption that effective and efficient copying

is a large-scale, publicly visible, commercial

activity, and therefore, that legal prohibitions

against unauthorized copying are enforceable.

This assumption, which was valid 20 years

ago, is being seriously challenged today because technology provides consumers with

the capabilities to be printer/publisher, on a

smaller, less-visible scale.

As defined in this report, private use– such

as home copying– differs from commercial

piracy in that the copies are not sold commercially. But copyright proprietors now argue

that the aggregate economic effect of individuals’ private use is equivalent to commercial piracy. 16 They claim that private uses, like

home audiotaping, deprive copyright owners

of revenues, reduce incentives to create and

disseminate new creative works, and discourage newcomers from entering creative professions. Representatives of the recording industry, for example, hold that home taping of

prerecorded or broadcast music frequently

displaces sales of records, prerecorded cassettes, and CDs, and thereby reduces their

revenues. In turn, they argue, this reduces the

number and variety of works they find profitable to produce and distribute, so that

stakeholders — including performers, studio

musicians, songwriters, and music publishers— are deprived of earnings. Moreover,

some claim that the greatest harm from home

audiotaping falls on new artists and songwriters, and on those in less popular genres (like

classical music), so that diversity is substantially reduced. They also claim that home

Representatives of the consumer-electronics industry and advocates of home audiotaping challenge these claims by asserting that

home taping does not necessarily undermine

the Copyright Act’s intended balance between

the rights of proprietors and the rights of the

public. They argue that home taping can

stimulate sales of recorded music by increasing interest in music generally and by broadening the market for recorded music. Moreover, they contend that the linkages between

industry revenues/royalties and creative incentives are complex, and that restricting

home taping would not necessarily result in

more employment in the arts or more variety

and widespread dissemination of creative

works. 18

New Technologies and the Boundaries of

Copyright-New uses of technology can exploit persistent ambiguities in existing laws.

Sometimes this can have the effect of lawmaking. This may be happening to copyright. The

recording industry considers that legal ambiguities and the increasing ease of making copies have been exploited to the point where consumers believe that they have a “right” to

tape. On the other hand, technological copy

protections, if adopted by recording companies and/or recorder manufacturers, will effectively “take away” this “right.” From the

public’s viewpoint, this would be equivalent

to a change in the law.

The private use of copyrighted works raises

questions about the degree of protection copyright proprietors should be granted, mechanisms to enforce that protection, and the way

160 TA.CIT-302, op. cit., footnote 2, p. 194.

17For an elaboration of these views, see: “HomeAudio RecordingAct,” Hearings Before the Committee on the Judiciary, U S. Senate, and its Subcommittee on Patents, Copyrights and Trademarks, 99th Cong., lst, 2nd sess., Hearings on S. 1739, Oct. 30, 1985, Mar.

25 and Aug. 4, 1986.

18For ~ e]a~]ration of these views, see Hearings on S. 1739, Op. cit., footnote 1’7.
ary between proprietors’ rights and those of

users.

Copyright issues raised by home audio- or

videotaping are part of broader questions

about the general status of home copying and

other private uses. The question remains

whether the overall objectives of copyright

are best served by granting copyright proprietors exclusive rights over home copying,

including the right to be compensated for

and/or to prevent home copying.

Up to now, the courts have made explicit,

limited, niche-oriented determinations about

cases involving home copying and other private uses. Since there is no other specific

statutory guidance, courts have made their

determinations according to the doctrine of

fair use (see above). Leaving these determinations to the courts, as specific cases arise, has

allowed Congress to avoid premature or

short-lived copyright legislation, and has

helped maintain flexibility in the face of

changing technologies. Current technological

and business trends, however, may make an

explicit congressional definition of the legal

status of home copying more desirable in order to reduce legal and market uncertainties

and to prevent de facto changes to copyright

law through technology.

These trends are:

● The movement to digital representations

of music, video, and other types of enter

powerful means for home users to interact with and manipulate works, as well

as to make derivative works.

The erosion of niche boundaries used to

categorize copyrightable works according to their content (e.g., audio, video,

computer software) or physical format

(e.g., audiotape, videotape, computer

disk).

The emergence of new delivery infrastructures to bring music, video, and

other forms of information and entertainment into the home (e.g., fiber optic

cable, pay-per-view and interactive cable

services).

The efforts of some copyright proprietors (e.g., in sound recordings and motion pictures) to develop and implement

technological means for copy-protection.

These will likely require congressional

approval for reasons of antitrust exemption and/or legal enforcement.

Extent of Home Copying and Its Economic

Effects

Previous Empirical Analyses and Disagreements – Much of the debate on home copying

has focused on surveys and economic analyses

to support or rebut copyright proprietors’

claims of economic harm.20 For example, recording companies and RIAA have sponsored

several such studies over the past dozen years

IYkchnologicaI changes can expand the scope and power of private uses, offering new capabilities for individuals to reproduce copyrighted material at home, manipulate it to make derivative works, and/or further disseminate it. At the same time, new technologies

can be used to control private uses – for example, restricting copying and, thereby, private dissemination and the making of derivative

works.

See also OTA-CIT-302, op. cit., footnote 2, ch. 7.

~Economic hum is one of the four criteria used by the courts to determine if an al]eged infringement of copyright is ftir use. AS

discussed above, application of the fair-use criteria maybe premature because current legislation is ambiguous as to whether copyright proprietors’ rights extend to private use like home copying. Nevertheless, harm is relevant to the debate because in considering

whether proprietors’ rights should extend to private use, Congress may wish to take the economic consequences of private uses into

account.
Photo Credit: Dave Maley, Ithaca College

Electroacoustic music studio

(see table 6-1 for a summary of these). Alan RIAA did not take into account the benefits of

Greenspan presented the results of the most home taping for consumers, or the stimularecent, by the consulting firm Townsend & tive effects of home taping on sales of recordGreenspan, in 1985 testimony. The testimony ings. But HRRC did not offer quantitative esincluded an estimate of recording-industry timates of their own to counter RIAA claims.

revenue losses due to home taping (see ch. 7

for details). These findings were rebutted by Some of the other unresolved contentions

the electronics industry and Home Recording from previous RIAA and HRRC surveys and

Rights Coalition (HRRC), who argued that economic analyses have stemmed from their

Townsend & Greenspan’s estimates over- underlying assumptions, as well as from the

stated the amount of taping being done and survey designs. We conclude that the earlier

the extent to which home taping displaces studies were insufficient as a basis for

sales. Moreover, they argued, the studies for policymaking, mainly because the method-
Photo Credit Optical Disc Mastering

Information is recorded on a CD as a series of tiny pits.

ologies and data for the surveys used in the

studies were not published in their entirety,

preventing independent analysis or verification. There were other methodological factors

that limited the usefulness of the earlier studies, and a new OTA survey was designed to address these factors.21

One area of continuing disagreement

among industry stakeholders is whether only

the alleged effects of home taping (or a taping

ban) on recording-industry revenues should

be considered for policy formulation, as opposed to also considering effects on consumers’ benefits or blank-tape revenues.22 A corollary to this disagreement is whether alleged

Especially given the ambiguous legal status

of home copying, OTA considers it appropriate to examine effects on consumers, as well

as on industry. The Recording Industry Association of America, Inc. position is that home

audiotaping of copyrighted music violates

current copyright law, and that the only relevant issue is that the industry is entitled to absolute protection of its music. Therefore,

RIAA considers that only the effect on recording-industry revenues, reflected in sales displacement, is relevant.23 Advocates of home

recording like the Home Recording Rights

Coalition and Electronic Industries Association consider that (noncommercial) home

taping is legitimate under the current law.

HRRC believes that the effect of copying or

copyright policies on consumer benefits is

also relevant. Furthermore, HRRC argues

that only the impact of taping on industry

profits and royalty payments to performing

artists and creators of works should be considered – not gross revenues to recording companies – because profits and royalties are the incentives that determine the supply of new

works. 24

The difference in relative magnitudes (gross

revenues versus profits and royalties) is substantial. In his 1985 testimony on behalf of

plThe sumey data obtained for Wand HRRC were based on different units of analysis (tapes V. tapings) S0 that the studies’

disparate findings could not be reconciled. The studies did not explore the effects of home copying, or of proposals to restrict or eliminate it, on society’s net economic welfare. The studies’ focus on active tapers, as opposed to the general population, did not permit

analysis for the population at large, or fully consider whether tapers and nontapers had different perceptions as to the fairness of

home-taping practices and alternative policies to restrict taping. Finally, the RIAA studies estimated lost industry revenues, not lost

profits and royalties (overstating “harm”), and did not fully take price and demand effkcts into account.

The OTA survey addressed the first three of these points. However, absent industry data with which to estimate price-cost margins, the OTA analyses were also forced to assume that prices remained constant in the short term and to focus on the effects oftaping

on revenues (rather than profits and royalties), which tends to overstate industry effkcts. See ch. 6 and ch. 7 for more details.

zzThe net effmt on s~iety’s ~onomic We]fme can be approximated as the sum of the effects on recording-industry revenues, blanktape industry revenues, and consumers’ benefits.

23H. ~sen, Recording Industw As~iation of America, Inc., letter to OTA, May 2, 1989 (enclosure with comments on drti ch. 8, pp.

1-2).

NGw J. Shapiro, ~~~ S. Schwtiz, and Steven R. Brenner, Home Recording Rights Coalition, rnernommlurn to OTA with COmments on economic issues, May 1, 1989, pp. 7-10.
compensablelosses to copyright owners

and creators (including the recording companies). Considering the recording-industry

rule-of-thumb that royalty payments to performing artists and copyright owners are

about 20 percent of the wholesale price of a recording, an estimate of 40 percent (of revenues) for profits and royalties seems high.

The OTA Survey on Current Home Copying

Practices and Motivations –Many of the arguments for and against the proposed legislative solutions to the perceived problem of

home taping hinge on empirical studies sponsored by firms and industry groups with a financial stake in the outcome. These include

several surveys of home audiotaping behaviors and attitudes. Congressional concerns

about the timeliness, bias, and credibility of

these surveys led OTA to engage a contractor

to undertake a new survey. OTA used an open

development process to design a survey that

would be useful to Congress yet would provide

data for others to assess the economics of

home audiotaping as well. The questionnaire

and resulting survey data are available to the

public through the National Technical Information Service. Here are the highlights of the

survey findings:

Audiotaping Four in ten of a nationally representative sample of persons aged 10 and

over have taped recorded music (either from a

broadcast or from a record, prerecorded cassette, or compact disc) in the past year. This

finding is similar to a 1982 survey, but larger

than 10 years ago, when surveys found that21

to 22 percent of the population had taped in

the preceding year. Music tapers, in general,

seem to have a greater interest in music and

do not listen to recorded music. See table 62

for yearly music purchases and tapings estimated from OTA survey results. )

Prerecorded audiocassettes are the most

frequently purchased music format. However, the survey finds that tapers more frequently copy from records than from tapes.

People who purchase a prerecorded item with

the intention of taping it (as did about oneseventh of the sample) are far more likely to

purchase a record or CD than a prerecorded

audiocassette. Many people seem to copy for

the purpose of “place-shifting,” that is, copying music from records and CDs to cassettes

that are used in automobile and portable cassette decks.

The survey finds that a large majority of

people who copied from prerecorded music in

their last taping session copied their own recording for their own use. They usually copied

with the intention of keeping the tape permanently. About one-fifth made copies for a

friend or copied a borrowed item.25 Few copies

were made from homemade tapes.

People who taped from radio broadcasts

were less likely to copy full albums than those

who copy records, cassettes, or CDs. In about

half of the most recent tapings of prerecorded

items, whole albums were taped.

Survey data suggest that home taping displaced some sales of prerecorded products.

But they also suggest a stimulative effect on

sales. That is, home copying helps advertise

songs and performers. In addition, a significant number of purchasers bought prerecorded products with the intention of copying

them.

25 The OTA sumey ~]i[] not K,nd much evidence of extensive or intensive copying networks or widespread membership in music

“swap clubs.)’ Of the 1,501 individuals surveyed, 261 reported borrowing audio recordings from persons outside their household. Of

these, about three-fourths borrowed from only three or fewer persons, and borrowed to copy rarely or a few times a year. Only 16

respondents reported belonging to a music swap club.
pp

taping incidents were for something other

than music. Tapes of noncopyrighted material vary widely in type, length, and lasting

value, with some, like answering machine

messages, being reused often.

The survey finds that availability of dualcassette and high-sped dubbing capability

had little to do with the number of homemade

tapes. People with many homemade tapes, or

with few, or even none, seemed to own equipment with these capabilities in roughly similar proportions. Thus, for analog recording at

least, dual- or fast-dubbing technology did not

seem to be driving copying behavior.

Contrasts Between Audiotaping and Videotaping Videocassette recordings, unlike their

audio counterparts, were largely made for

temporary use. Most videotaping fits the definition of “time-shifting” outlined in the Supreme Court’s 1984 Sony decision (see above).

A few specific types of programs-including

concerts and educational shows – were copied

for permanent use.

The survey finds that, while television taping was common among VCR owners, copying

other videotapes was less common. Of the

tapes copied, only a minority belonged to the

copier. Some originals were rented from video

stores, but the bulk were obtained from

friends. Thus, there appears to be a modest

level of exchange of videotapes among friends

for the purpose of copying.26

While the survey found a somewhat higher

incidence of video copying among music tapers than among nontapers, there was no

strong connection between video- and

y pp

Public Opinions About Home Copying Most

members of the public were unfamiliar with

copyright law and its application to home taping. Nevertheless, they had opinions on the

norms of acceptable behavior in home taping.

In general, the public–both tapers and nontapers – believe that it is acceptable to copy a

prerecorded item for one’s own use or to give

to a friend. The only copying that was universally considered unacceptable – by tapers and

nontapers – was copying a tape in order to sell

i t .

2 7

Most members of the public had no notion

whether home copying was fair to the recording industry, to performers, or to the consumer. They did, however, strongly oppose all

the tested suggestions for changes in the system that would impose user fees or limit taping through technological fixes.

OTA’s Economic Analysis-OTA commissioned three independent economic analyses.

The analysis by Michael Katz developed a

theoretical framework for analyzing the economic effects of home copying. It shows that

the effects of private use, including home

copying, on economic efficiency and on society’s economic welfare are complex and ambiguous. The effects of private use depend

critically on the assumptions about demand

for originals and copies and the effects of

copying on the long-term supply of new

works. Choosing among assumptions about

underlying factors is a subjective process.

Some of the most crucial factors are very difficult to measure and several alternative assumptions may be equally plausible — for example, the extent to which consumers would

zeof the&j sumey respondents who reported ever borrowing a videotape, the majority reported that they rarely or never borrowed

to copy. Of those who did, virtually all reported doing so only a few times a year.

zTBut the Younwst res~ndents (ages 10-14) were almost neutral on this issue — the unacceptability of se]]ing home copies increased with age.
ppy 

mates, yet this type of uncertainty is unlikely

to be reduced by more data.

William Johnson used the OTA survey to

examine some of the factors that influence

home audiotaping and purchasing originals.

Johnson found that individual choice between

copying and buying originals is determined in

part by the person’s value of time: a person

who values his time highly tends to copy less

and buy more. Johnson also found that income increases the demand for both copies

and purchases and that copying is more concentrated among the young. He was unable,

however, to detect statistically significant estimates of the extent that copies substitute for

originals.

Fred Mannering used survey data on the

consumers’ choice of format for listening to

music to estimate econometric models of consumers’ choice between purchasing recorded

music and taping it. He used these estimates

to determine the change in consumers’ economic welfare (based on their valuation of

homemade tapes) in response to a hypothetical ban on home audiotaping. In addition, he

estimated hypothetical changes in recordingindustry revenues (under various assumptions about the degree to which home tapes

displace and/or stimulate sales of recorded

music) and hypothetical changes in blanktape revenues (assuming fewer blank tapes

were sold absent copying). While the scenario

of a ban is extreme, it allows the change in re

p()g

with effects on blank-tape industry revenues

and consumers. The net effect on industry

revenues is the sum of the estimated changes

in recording-industry and blank-tape revenues. The net effect on society’s economic welfare was approximated by adding the industry

and consumer effects.

Chapter 7 discusses Mannering’s analysis in

detail, and presents estimates of the hypothetical effects of a ban on home taping that

the same set of survey and other data can be

“shown” to support.28 These examples produce a broad range– varying by a factor of

30–of hypothetical recording-industry revenue changes absent home audiotaping.29

These variations do not, however, alter the

qualitative result, which indicates a consistent loss in consumers’ economic welfare and

in society’s net economic welfare.

The estimated loss in consumers’ economic

welfare reflects the value consumers place on

home taping. It is a monetary valuation of

consumers’ loss in satisfaction, without any

loss in actual income, after a taping ban. Absent taping, not all home tapes would be replaced by purchases. (Other applications of

this type of analysis include estimating the

monetary value of consumers’ dissatisfaction

from increased airline travel time and the

monetary value of increased satisfaction from

reducing the time between airline departures. 30)

M* tables 7-11 and 7-12.

~he variations–24 examples in all, shown in tables 7-11 and 7-12 –differ according to: whether both prerecorded and broadcast

music taping or only taping from prerecorded sources is banned, whether an attempt is made to correct for business use of blank tapes,

how much Salesdisplacing material is assumed to be on each tape, how the OTA survey questions on displacement are interpreted

and/or discounted to produce a sales displacement rate, and whether the ability to make home tapes is assumed to st i mu late some

purchases of prerworded music.

%keven Morrison and Clifford Winston, Economic Effects of Airline Der-egu/utzon (Washington, DC: The Brookings Institution,

19$6).
ygg

on audiotaping would reduce blank-tape revenues, be more harmful to consumers than

beneficial to the recording industry, and result in a loss of benefits to society in the billions of dollars. The longer-term consequences

of a ban are less clear, and would depend on

how recording-industry profits were invested,

on how increased revenues would affect the

creation of new works, on how recording companies chose to price recordings, on what new

technologies were introduced, and on how

consumers) tastes changed.31 In the long term,

the net effects on society’s economic welfare

might be positive or negative.

Even if policy formulation is based on

short-term economic considerations, net effects should be considered along with effects

on individual industries and consumers.

Based on the OTA survey data, Mannering’s

results show there is no single estimate of the

dollar values gained or lost as the result of a

taping ban.32 A ban would have distributional

effects among industries (i.e., recording- versus blank-tape) and consumers, but these

effects don’t balance. Instead, because consumer benefits from home taping appear to

be so large, a ban would result in a large net

loss of benefits to society. These net effects

should be considered in policy formulation. It

is potentially misleading to base policy on an

estimate of only one of several harms or benefits.

Congressional Role

Congress faces a complex set of choices regarding home copying. The question of

whether the public interest is better served by

pyp

copying) is fundamental in making these

choices. The next section of this chapter discusses the dimensions of the policy choices

facing Congress, and presents options to implement them. For the more specific options,

the focus is on home audio copying. The final

section discusses implementation considerations.

POLICY CHOICES AND

OPTIONS

Introduction

Some choices facing Congress offer broad

alternatives for action, cutting across boundaries of industry and technology, and offering

the opportunity to establish policies for the

next decade and beyond. Other alternatives

are more narrowly defined within a particular

industry or technology, such as home audio

copying or home use of DAT recorders. While

more narrowly defined policies may be more

easily formulated, their usefulness may be

shorter-lived, as technology creates other

problems.

Previously, the state of technology made an

explicit determination about the extent of

copyright proprietors’ rights over private use

less crucial than today. There was less private

use and enforcement against private copying

was difficult. Now, technological changes

have lowered the cost and increased the scope

of private copying; at the same time, technological changes make it possible to impose

high barriers to unauthorized private copying.

al~=sslng the ]Ong.term eflWts of finmci~ incentives on creativity and output would be extremely difiicult ~d would re@e full

disclosure of proprietary industry data.

32Depending on selections among reasonable assumptions, following a taping ban recording-industry revenues might not change

much or might increase by several tens of percent. Blank-tape revenues would decline substantially. See ch. 7 and tables 7-11 and 7-12.
pygp

over effects between industries.33 Even quite

specific options for dealing with home copying

must be selected within the broader legal context of private use.

The first choice Congress faces is whether

to address home copying issues at all at this

time. If it does not act now, or avoids premature legislation that might soon become obsolete, then home audiotaping issues will likely

be resolved – with some delay and in a piecemeal fashion – by inter-industry accommodations and/or the courts. As a consequence, the

underlying issues of private use will likely

resurface in other areas like home videotaping, electronic information, and computer

software and result in legal uncertainties that

will further complicate industry decisionmaking. Moreover, industry agreements may still

require congressional action to ratify the

agreement for purposes of enforcement or relief from antitrust. A series of piecemeal accommodations would incrementally define

the boundaries of the copyright law.

If Congress chooses to act now, then it must

choose whether to address home copying in a

comprehensive or limited fashion. Comprehensive policies may be more long-lived, but

may take longer and be more difficult to formulate. Limited policies might be developed

more quickly but would not resolve parallel issues in other areas. Meanwhile, home-copying

controversies in these other areas might result in technological “solutions” that would

have the effect of changing the copyright law

to extend copyright proprietors’ rights into

private use. Moreover, polices developed by

Whether Congress approach to home copying is broad or narrow, a third set of choices

applies for each (or any) area of home-copying: whether to allow it, foster it, or restrict

it. To “allow)’ home copying would mean stating explicitly that proprietors’ rights do not

extend into private use. To “foster” home

copying would mean not only “allowing” it,

but also limiting anticopying measures, including agreements to implement technological copy protections. To “restrict” home copying would mean stating explicitly that

proprietors’ rights extend to private use–

that home copying is copyright infringement.

Restricting home copying could also include

provisions for legal enforcement of copying

bans, mandatory use of technological copy

protection, and/or compulsory licenses and

fees for home copying.

Interim, narrowly focused legislation

might relieve some of the pressing issues in

the near term, thus providing time to formulate comprehensive solutions. If this strategy

is chosen, the preferred interim policy options (pending comprehensive resolution)

might be different from those preferred if

only the near-term view is considered. Some

interim measures are more difficult or costly

to undo than others. For example, an interim

home-copying royalty fee could eventually be

rescinded, but there would be some inertia,

and recipients may have come to view it as an

entitlement (e.g., as individuals have viewed

subsidized local telephone service or as consumers view their “right” to make home copies). Some technological means for copy-protection may be embedded in the works

themselves (e.g., the Copycode “notching”); if

changes in the law subsequently held that the

‘For example, DAT can be used for computer data storage as well as audiotaping. Some industry observers consider that the controversy over DAT audiotaping has afTected development of DAT computer peripherals.
chased players with scanner chips would have

to bypass them).

Advisory panel members from the creative

and performing arts communities consider

home copying (which in their view reduces income to performers and creators) to be particularly unfair to their groups because, compared to recording companies, they tend to be

underfunded. They see digital copying as the

latest in a series of technologies that has progressively taken away work from performers

and musicians and has increased the need for

subsidies to maintain the arts. Opinions differed among members of OTA’s advisory panel

on the relative importance of home copying to

the problem of encouraging the arts. But several panel members felt that the overall issue of

financial support for the arts deserves attention. This, however, is beyond the scope of this

study.

Fundamental Copyright Policy

Questions

Underlying the choices facing Congress are

fundamental policy questions and value judgments. Foremost among these is the issue of

whether copyright holders’ rights should be

extended to private use. Audiotaping has

been widespread for years. Copyright holders

like recording companies have been unable to

prevent home copying unilaterally and have

changes now make it possible for copyright

proprietors to restrict unauthorized copying.

However, for audio copying, implementing

technological copy protections would require

agreements between the recording industry

and audio-equipment manufacturers and/or

legislation. 34

The intent of U.S. copyright law is to serve

the public interest by jointly promoting widespread dissemination of intellectual property

while providing sufficient incentives for the

creation and distribution of new works. New

technologies can assist in both goals.

New technologies are able to extend the

traditional bounds of copyright to include

private use. The major question facing Congress is whether extending copyright proprietors’ rights to private use is necessary to serve

the public interest.35

Other questions concern the rights of the

artist or creator versus the rights of the consumer to modify the artistic works. In the

United States, the creative artist has traditionally had no protection or control over his

work once it is sold (see ch. 3). The purchaser

has been free to use, modify, or mutilate the

work.36 Until now, there has been a clear distinction between mass-produced entertainment products and artistic works that are

unique or produced in limited numbers. New

technologies may provide consumers with the

a4For example, microprmessors em~dded in recorders could recognize copy-protection codes in the soflware, ~ong with other

codes that identify the specific work.

MOTA is ~atefu] t. D. Mou]ton for his comments in this regard. Noting the rapid transformation of creative works into the digital

realm, and the consequential improvements in (lower-cost) storage, transmission, and reproduction, Moulton considers that a copyright law for future decades will have to address the issue of compensation due copyright holders whose works are not tied to or fixed

in physical media. Toward this end, Moulton suggests a broad approach focusing on documenting and compensating the transfer and

use of such intellectual property. (David Moulton, Berklee College of Music, personal communication, Aug. 5, 1988. )

se~me r=ent controversies concerning artists’ rights have involved motion pictures (colonization and time compression) and fine

arts (painting sculptures), Another involves the rights of composers– protection against “material alteration” for works used for

motion picture soundtracks –and writers whose existing works are later incorporated into motion pictures (Bill Holland, “U.S.

Pushes ‘Moral Rights’ for Composers, ” Bilbomd, Apr. 1, 1989, p. 4.).
p

pends as much on the legal status of these uses

as on the state of technology. Thus, congressional consideration of home-copying policies may require some attention to questions

about the broader concept of artists’ rights

and copyright (see box 1-A).

Choices for Congress

The first decision that Congress faces is

whether to address home-copying issues at all

at this time. This is a real choice — to act now

pyg g g 

Waiting would allow the effects of new digital

copying technologies to become more evident,

so that any eventual copyright legislation

could be based on real experience, rather than

on assumptions or projections from analogcopying experiences. If the choice is not to act

now— i.e., the choice is to maintain the status

quo or to avoid premature legislation – then

the issues raised by the home audiotaping

controversy will likely be slowly addressed in

a piecemeal fashion by the courts,37 by threats

of lawsuits,38 and/or by private arrangements

Box l-A– Questions Concerning Artists’ Rights and Private Use

In some European countries a major goal of copyright laws is to protect the connection between the artist and

his work through artists’ rights or moral rights recognizing the author’s creation of the work and/or prohibiting

the change, mutilation, or alteration of artists’ works. Artists’ rights were first recognized by the Berne Convention in 1928. In adhering to the Berne Convention in 1989 the United States specifically did not agree to the

provisions for moral/artists’ rights (see ch. 3).

. Should the European tradition of moral rights be adopted in the United States so that artists have continuing or permanent rights to the “integrity” of a work? Or, are the creative, economic, and legal differences great enough that a different approach for dealing with artists’ rights is desirable?

● If artists’ rights are granted in the United States, should these rights end at the home, or should they

encompass private domestic uses? Should purchasers be able to do whatever they want with the work

within the home — including modifying, enhancing, or destroying it?

. If a purchaser “customizes” a work to meet his or her needs (e.g., cuts a painting down to fit in the home or

copies only favorite songs from an album to make a custom audiotape), should the Government step into

what may be a purely “personal” occurrence? Where are the boundaries?

. If artists’ rights are granted in the United States, can they be enforced? How, when, and by whom? What

will he the effect on the market valuation of works? What are the privacy and First Amendment implications of enforcement over home uses?

. If artists’ rights are granted in the United States, should they only address financial loss, or should emotional distress or a lessening of the artist’s creative reputation be included? Who would determine the

extent of these harms, and how? Arguably, situations could exist where modification of a work could enhance it aesthetically or materially. Should such modifications constitute “harm”?

SOURCE: OTA

37 The 1984 supreme Colifi dalslon~~ut home videotaping is an examp]e. Although the Supreme COUrt and Other courts have

provided some guidance in h~]me-copying situations, many yuestions and issues remain unresolved; the Supreme Court has previously inferred that Congress may wish to examine such issues (see ch. 3).

38This typ of threat has ~nat ]east p~ial]y respnsl~le for the (]e]ay~ introduction of consumer DA’T machines to the U.S.

market – now 2 years or more.
But court decisions will not put home-copying issues to rest. Issues that surfaced for

home audiotaping have already begun to

resurface in other areas, like home video,

computer software, and other forms of electronic information and entertainment.40 Absent congressional action, these new controversies might also be dealt within a piecemeal

fashion, with industry or the courts incrementally delineating the boundaries of copyright

law. Because of antitrust considerations, Government involvement might still be sought to

ratify or enforce intra- or interindustry agreements (see box l-B). Over the long term, this

pattern of threatened litigation and/or requests for special legislation will become cumbersome and costly to society. The technological trends discussed in the next chapter will

tend to increase the number, frequency, and

complexity of questions about home copying

and private use. Further erosion of niche

boundaries can undermine “piecemeal” solutions. Moreover, some copyright proprietors

consider that nonaction could disastrously reduce economic returns from intellectual property. The recording industry considers that,

“If the rights of copyright owners are not adequately protected, the continued viability of

our industry cannot be maintained.”41

hardware and new audio formats (for example, DAT and now, erasable/recordable compact discs), and have made market solutions

doubtful. There are other difficulties with

market solutions:43 because it is difficult to

distinguish between copiers and noncopiers,dd

a “pay at the source” approach for copying

through the pricing of recordings would likely

increase prices for tapers and nontapers alike,

with the possibility of reducing demand for

originals or encouraging more copying. Offering copyable and copy-protected versions of

prerecorded works, or bundling products

(e.g., packaging a CD and cassette together at

a discounted price) have been considered impractical. However, if home copying was explicitly declared not to be an infringing use,

then manufacturers and retailers might find

it more advantageous to change pricing or

product lines.

Similarly, uncertainties stemming from the

ambiguous status of home copying may also

delay the introduction of new products and

technologies in other areas, perhaps affecting

the prospects for telecommunications systems, such as fiber-optic cable or new media

like high-definition television (HDTV).45 The

effects of these uncertainties and delays are

not limited to hardware. Incentives to create

ogIn e~]y Ig89, the consumer electronics and record industries reportedly began negotiating agreements regarding DAT machines;

the discussions reportedly centered on technical methods to prevent home taping and/or fees on DAT machines or tapes. (Shig Fujita,

“Hardware Firms, Labels Closer to Accord on DAT,” Billboc+ Apr. 1, 1989, p. 1; TVDigest, vol. 29, No. 12, Mar. 20, 1989, p. 16. )

AOFor emp]e, there is now a movement by the Motion Picture Association of America (NIPW) for tmhnologicd copy-protection

for motion pictures delivered via pay cable and pay-per-view (PPV) services (see ch. 2).

41 H. ~Wn, RIAA, letter to J. Winston, OTA, May 2, 1989, P. 2.

● For exmp]e, a firm that considers home copying “illegal” is more likely to seek to prevent home copying, or to be compen~ted for

it, than to change pricing policies to reflect the added value of originals as a potential source of copies.

43See ch. 7.

44The prev~ence of home Copfing Vwies according t. the typ of materi~. For ex~p]e, most of the OTA survey respondents had

audio recording equipment, and about half reported making home copies from prerecorded material. By contrast, only about one-fifth

of the VCR owners had ever copied a prerecorded videotape.

4Whese new infrastructures are examined in U.S. Congress, OffIce of Technology Assessment, Critical Connections: Communication for the Future, OTA-CIT-4W (Washington, DC: U.S. Government Printing Office, forthcoming)
Businesses that desire to join together as an industry to protect their economic interests have two sources of

potential protection from the antitrust laws. First, they may direct their actions toward legislative or executive

bodies and gain protection under the Noerr-Pennington doctrine. Since the Noerr-Pennington doctrine applies

only to government petition, however, Congress or a designated agency would still have to approve industry

agreements that require antitrust exemption. Second, they may request a prior review of their intended actions

by the Antitrust Division of the Department of Justice under 28 CFR section 50.6. The Antitrust Division claims

not to be constrained by its business reviews, however. Also, a large proportion of antitrust cases are brought by

private plaintiffs, and it is not clear how much private litigation is deterred by business reviews. ’

The Noerr-Pennington doctrine, initially formulated in a 1961 railroad case (Eastern R.R. President Conf.

v. Noerr Motor Freight, Inc., 365 U.S. 127 ( 1961)), holds that joint efforts by businesses to influence legislative or

executive action represent political action (protected by the First Amendment), which Congress did not intend to

regulate through the antitrust laws. As the U.S. Supreme Court observed, “the very concept of representation

depends upon the ability of the people to make their wishes known” (ibid. at 37), and so “efforts to influence

public officials, regardless of intent or purpose...do not violate the antitrust laws, even though intended to eliminate competition”. (United Mine Workers v. Pennington, 381 U.S. 657,670 (1965))

Although the Department of Justice is not authorized to give advisory opinions to private parties, for several

decades the Antitrust Division has been willing (under certain circumstances) to review proposed business conduct and state its enforcement intentions. A request for business review must be made in writing to the Assistant

Attorney General (Antitrust Division); the requesting parties are under an affirmative obligation to make full

and true disclosure with respect to the business conduct for which the review is requested. After the review, the

Division may: (i) state its enforcement intention, (ii) decline to pass on the request, or (iii) take such other position or action as it considers appropriate. The Division remains free to bring whatever action or proceeding it

subsequently determines that the public interest requires. The request, reply, and other supporting information

are generally placed in a public file, unless a firm can make a case for withholding it from the public. To date the

Department has never brought a criminal action where there has been true and full disclosure at the time of

presenting the request. (Excerpted from 28 CFR, section 50.6, )

According to the Antitrust Division, at the time of publication, there was no public information as to whether

the recording industry had submitted a request for a business review.

SOURCE: OTA

1 T. Brennan, The George Washington University, personal communication, Apr. 24, 1989.

and produce new types of works can also be af- “seamless)’ transition is unlikely.46 Who bears

fected, although these effects cannot be esti- these costs and how they are distributed

mated with precision. The linkages are ex- among the hardware industries, the software

tremely complex, and the effects of changing industries, consumers, and the general public

financial incentives on the supply of creative depend on the policies chosen.47 Choosing an

works are very long-term. appropriate balance of harms and benefits

from uses of new technologies is a political

Whatever policy measures are selected, the decision, not a technical one, in which the

transition will have adjustment costs; a public has a stake.

d6There me ~ver~ ~sslb]e adj ustment5. C)ne c[)u]d ~chmges in the current levels and/or distribution of industry costs, revenues,

and royalties. Another could be establishing mechanisms and institutions to enforce prohibitions on copying andh)r to collect and

distribute new licensing fees. Still another could be changes in t,he way one or more industries do business – evolving to new products,

new technologies, new markets.

47 The ~rrent home-copying de~tes have been largely dist, ribut ional in nature, so it is not surprising that Wlicies to resolve them

have distrihut.ional consequences.
Option 1: Take no action on home copying

at this time.

Congress could avoid premature remedies

that might be short-lived, and wait until the

impacts of digital technologies are assessed.

The drawback is that the ambiguous legal

status of home copying might hinder creativity and delay the introduction of new consumer technologies. Moreover, the home

audiotaping issue, and similar controversies

in videotaping and computer software, might

lead to piecemeal solutions by the courts or

the industries involved. The results of such accommodations might be difficult to undo if

they should prove ineffective.

Option 2: Deal with home copying in a

broad context. Consider the general problems

associated with copyrighted works and technological trends. Determine whether the public interest warrants allowing, fostering, or

restricting home copying generally, or specifically for certain types of works.

By taking this action, Congress could establish a relatively stable legal environment and

eliminate some market uncertainties. This

may take several years to achieve. In the

meantime, market and legal uncertainties

would continue, and might lead to industry

actions such as “voluntary’ technological

copy-protection. Such measures would, in effect, extend the rights of copyright proprietors into private use before Congress had determined whether it was in the public interest

to do SO.

Option 3A: Allow home audio copying.

Option 3B: Allow analog home audio copying

Option 3c: Allow digital home audio copying

These options would end at least some of

the legal uncertainties of home audio copying

and would free firms to make decisions about

cording companies and music publishers,

would be free to copy-protect their works, but

clever consumers could circumvent these

measures. Intra- or interindustry agreements

would be subject to the antitrust laws, but

might be accorded special exemptions.

Analog and digital copying could be treated

separately. Home analog copying is well established, and might be more dificult to prohibit, restrict, or license than home digital

copying, which is not yet widespread in the

United States. Because of its speed and high

quality, digital copying is thought to present

the greater legal and market challenge.

Option 4A: Foster home audio copying.

option 4B: Foster analog home audio copying

Option 4c: Foster digital home audio copying

Legal uncertainties would be reduced. Under these options, industry agreements to implement copy-protection technologies would

likely not withstand antitrust review.

Option 5A: Extend copyright holders’ rights

into private use and prohibit home audio

copying by requiring the use of copy-protection technologies in recorders and software.

Option 5B: Extend copyright holders’

rights into private use and prohibit analog

home audio copying by requiring the use of

copy-protection technologies in recorders and

software.

Option 5c: Extend copyright holders’

rights into private use and prohibit digital

home audio copying by requiring the use of

copy-protection technologies in recorders and

software.

These options would increase the prices of

hardware, because additional features (e.g.,

protection circuitry and logic) would be re-
Option 6A: Extend copy-right holders’ rights

into private use and establish a compulsory license for home audio copying.

Option 6B: Extend copyright holders’

rights into private use and establish a compulsory license for analog home audio copying.

Option 6C: Extend copyright holders’

rights into private use and establish a compulsory license for digital home audio copying.

Congress would have to establish means

and criteria for administering and distributing the royalties, and determine whether they

should be applied to sales of recorders, recording media, or both.

Option 7A: Extend copyright holders’ rights

into private use but establish a free compulsory license for home audio copying.

Option 7B: Extend

rights into private use

compulsory license for

copying.

Option 7c: Extend

rights into private use

compulsory license for

copying.

copyright holders’

but establish a free

analog home audio

copyright holders’

but establish a free

digital home audio

This option would broaden the scope of

copyright but would retain flexibility in restricting copying or establishing royalties. Observed usage patterns for the new digital copying technologies could be used as a basis for

policy, instead of forcing policy-makers to act

on assumptions about consumer tastes and

behaviors.

Option 8: Select from the above, with different treatment for analog and digital copying,

Combinations could allow current behaviors to continue but could tailor uses of new

technologies or products (e.g., combining Options 3C and 4B, or 5C and 7B, etc.).

CONSIDERATIONS FOR

POLICY IMPLEMENTATION

Distinguishing Among Types of

Home Copying

In considering whether to allow, foster, or

restrict home copying, or to take no action at

this time, Congress must define what home

copying is.48 Furthermore, Congress might

wish to set policies that make special provisions for particular types of home copying.

Statutory definitions of home copying could

be drafted broadly or narrowly and segmented into categories of type and use.

For example, home copies may be made

from purchased, rented, or borrowed originals, or from broadcast or pay-per-view material. They may be made for personal use or for

a friend or relative. Copies may be made for

one-time use or as additions to a home-recording “library.”@

The benefits consumers derive from home

copying and the impact of home copying on

revenues earned by copyright holders depend

on the nature of the copy and how it is used

(see box 1-C). Home copies are often more

flexible than “originals.” They can be interrupted, restarted, and manipulated; the programming can be customized for personal

48 For ~mp]e, the new British copyright ]aw defined “time-shifting” and “cable programming)’ when declaring that time-shifting

of broadcast or cable programs was not an infringement.

49Note that these attributes me not inten(~~ t.& niche. sF1fic – for examp]e, one criterion is not whether the commercial source

material is “audio” or “video” but whether or not it is priced for a single use or unlimited uses.
Attributes

The source of the copyrighted material used to make a home copy could be one or several purchased, rented,

or borrowed “hard copy” originals (e.g., records or commercial videocassettes), or original material delivered to

the home by broadcast stations (radio, television) or cable/satellite system operators (basic, premium, or pay-perview services). The original material might be integrated with advertising (e.g., commercial broadcast television

or basic cable), delivered with surrounding advertising (e.g., radio, public television, “previews” at the beginning

or end of a commercial videocassette), or delivered without advertising (e.g., premium cable channels).

Home copies may be made in the identical format as the original, or in formats that differ in terms of the

physical configuration (e.g., record/tape/CD), and the forms in which the original and copy store the work (e.g.,

analog or digital). For example, a DAT recorder could make a digital copy of a prerecorded DAT cassette, or it

could make a digital copy of the analog material on a record (by sampling the analog signal). “Format-shifting”

(particularly from records to tapes, and from digital compact discs to analog tapes) is currently important for

home audiotaping. The OTA survey found that only about a third of home audiotapes made by respondents

using prerecorded sources were copied from prerecorded cassettes. The bulk of home audiotapes of this type

were copied from records and CDs, presumably for portable or car use. Moreover, an original maybe the source of

more than one copy, although the results need not be identical (e.g., a song may be copied onto two different

selection tapes).

uses

The uses made of originals or home copies vary according to three dimensions: the frequency of use, the

manner of use, and the identity of the user. Looking first at frequency of use, we see that an “original” maybe

offered in the marketplace for a single use (e.g., a pay-per-view movie or sports event), multiple uses within a

freed time period (e.g., a rented videocassette tape), or unlimited uses (e.g., a purchased videocassette tape). A

purchased (tangible) original or a home copy are potentially available for unlimited uses. In practice, however,

some types of home copies are made to be used only temporarily — e.g., a time-shifted television serial or sports

event — while others are intended for repeated uses — e.g., a homemade selection tape of favorite songs, or a

homemade copy of a prerecorded videocassette tape.

The manner of use of an original or copy may be uninterrupted (e.g., original broadcast material or pay-perview movies/concerts), or interruptible and/or manipulable (e.g., a purchased original or homemade audio- or

videotape that can be stopped and started again after a refreshment break, rewound to catch a missed detail, or

“zipped” past commercials).

The identity of the user of the original and home-made copy maybe the same or different. An owner of an

original may use it to make copies for himself or others, he may rent an original to copy, or he may borrow an

original from another household member, or a relative or acquaintance.

SOURCE: OTA

taste. To the extent that consumers value this ture the added value for other reasons, or they

flexibility, they will prefer copies to originals. may prefer to sell multiple identical originals

Originals then become more valuable as a (e.g., record and tape) than increase retail

source of copies. Copyright proprietors may prices to recover consumers’ valuation of copbe unwilling or unable to adjust prices to ac- ies (for changing from record to tape, custom

count for copying, they may be unable to cap- programming, etc.).50

~OBy contrast, the trend toward ~y-~r-tr~~ction video rentals (see ch. 2) reflects in part the desire of copyright proprietors to

share in each rental transaction, as opposed to setting a standard price not based on usage.
gramming), home copying ostensibly reduces

the value of advertising as well. For example,

commercials may not be copied, or if copied,

may be “zipped” through.51 For works that

are entitled to performance royalties, because

the majority of performers’ payments come

from fees for reuse established in collectivebargaining arrangements, some performingartist and musician groups believe that their

income is reduced if home copying cuts down

on repeat broadcast performances.52

Detailed categories of home copying could

be established (box 1-D),53 but the number entitled to special treatment through public policy are fewer. It is probably practical to identify only four types of home copying that

might merit special policy treatment:

Copies made from commercial material

that is priced according to the expected

frequency of usage – e.g., rented originals or material delivered to the home on

a fee-per-use basis54

Multiple copies made from the same

original

Digital copies

Technological Copy Protections

Implications of Allowing, Fostering, or Restricting Home Copying

Congress could foster or restrict home

copying by prohibiting or encouraging technologies designed to control it. Technological

restrictions could be built into recording

hardware, software, and/or electronically

transmitted material. If Congress chose to

continue the status quo of allowing home

copying, then copyright holders could possibly act on their own to prevent unauthorized

copying through technological means.

To restrict home copying, Congress might

choose to prohibit the domestic sale or importation of recording equipment that did not include a device or circuit to prevent unauthorized copying (e.g., by recognizing special codes

embedded in software or transmissions). The

Commission of the European Communities’

1988 Green Paper favored this approach toreSlwhi]e many newer te]evislon sets come ~th remote contro] features, and some cable services offer remote control channel select ion, for many households it was the VCR that first brought remote control into the home. One aspect of remet e cont,rol/VCR use that

attracted attention during the Sony case was the potential to not record or to fast-forward time-shifted material past corn mercials.

Now, with remote-controls, consumers not only “zip” through commercials during playback, they “zap” from one channel to another

during commercials while watching TV. As a result, particularly with the expanded offerings on cable, consumers (particularly those

under age 35) are “grazing”: flipping through channels out of boredom or to see what else is on. (Peter Ainslie, “Confronting Nation of

Grazers,” Channels, September 1988, pp. 54-62. Channels commissioned a national survey of TV viewing habits. )

A recent survey found that at least 66 million households have remote controls and that, on average, viewers with remote controls or

cable “usually” watch twice as many different channels as those without, and those with VCRs Watch more channels t han those without. (Data from Commercial Analysts Co. and Frank Magid Assoc. reported in Multichannel News, Oct. 31, 1988, p. 53. )

WOTA stfi intemiews with representatives of performing artists and musicians, Ju1. 13, lg~.

~aFor exmp]e, one cateWW might consist Ofcopies of broadcast material kept within the household for a sin#e manipulable use.

Another category might consist of copies containing portions of several owned recordings, kept within the household and made to

provide the material in a different storage medium for unlimited uses.

azThe ]atter Wou]d inc]ude ~y-Pr-fiewofferings. Note, however, that pay-per-view is different from direct electronic delivery M

discussed in ch. 2. Original material purchased via direct electronic delivery would be treated like any other purchased origin~.

Alternatively, prices for these services could be raised to take copying into account, or copyable and copy-protected versions could be

offered at different prices.
The source of the material copied:

● Tangible sources

Prerecorded material owned within

the household

Prerecorded material borrowed from

outside the household

Prerecorded material that has been

commercially rented

. Intangible sources

Free broadcast material

Material delivered via basic cable

service (e.g., broadcast stations)

Material delivered via premium cable

subscription services

Material delivered via delivery-on

-demand with per-transaction

payment

(e.g., pay-per-view)

The disposition and use of the copy:

● Kept within the household

. Given to others outside the household

● Loaned to others outside the household

The format of the copy and original:

● Same or different storage medium

(format shifting)

. Multiple (partial) copies from the same

original

. Multiple identical copies

. Multigenerational copies (“cloning”

copies of copies)

. Analog or digital original

. Analog or digital copy

Quantity and quality of use:

● Single uninterrupted use

. Single interruptible use

. Single manipulable use

. Multiple uninterrupted

uses for a fixed time period

. Multiple interruptible/manipulable

uses for a freed time period

. Unlimited interruptible/manipulable

uses

SOURCE: OTA

consumers might complain that such a law

would be a costly burden, it would not be the

first time that Congress had implemented a

technical requirement for domestic consumer-electronics sales. In 1962, Congress

passed the “All Channels Receiver Act,”56

which authorized the Federal Communications Commission (FCC) to prohibit television receiver manufacturers from selling sets

that did not receive UHF broadcast stations.

In that case, the intent was to foster UHF

broadcasting.

In pursuit of this policy, Congress could be

expected to permit producers of copyrighted

material (e.g., recording companies) to embed

copy-protection codes in the software they

produced (like computer software is sometimes protected), and perhaps even to require

that broadcasters who played copy-protected

material (e.g., radio stations) include any anticopying codes in their transmissions instead

of removing them before transmission.

To foster home copying, Congress might

prohibit the sale of recording equipment that

is engineered to hinder home copying or other

copying deemed fair use, since such designs

would be considered restraints of trade. Similarly, Congress might prohibit users of the

publicly owned broadcast spectrum from

broadcasting anticopy codes that would prevent time-shifting playing at a later time.

Such legislation would be justifiable on the

same basis as the Copyright Act’s first-sale

doctrine limiting copyright proprietors’

rights (see ch. 3). Finally, Congress might even

prohibit software producers (e.g., recording

companies) from embedding copy-protection

codes in their products, though this would

probably be unnecessary in the absence of

sensing devices in recorders.

s~ommls~ion of the Eurowm Communities, Green PaPr on Copyright and the Chailenge of Technology: Copyright Issues Requiring Immediate Attention, COM(88) 172 find, (Bns*ls, Belgium: June 7, lg~), P. 136.

~fib]ic ]aw ~7-529, SW.. 1 (76 Stat. 150, codified at 47 Uw 303(s)).
g p

could act on their own to frustrate unauthorized home copying. Any actions they took to

lobby Congress, the executive branch, or the

Copyright Office to promulgate protective

regulations would seem to fall under the

Noerr-Pennington doctrine, and would

thereby protect them against antitrust prosecution. If the copyright holders sought to

threaten hardware manufacturers to prevent

them from marketing recorders that did not

adequately inhibit home copying, however,

they would face a high risk of antitrust lawsuits.

If Congress were unwilling to require recorders to have anticopying devices, one way

for copyright holders to possibly avoid antitrust action would be to submit a letter to the

Antitrust Division of the Department of Justice explaining the economic justifications for

the proposed action and requesting a business

review. If the Department of Justice concurs

that the benefits of this protection outweighs

its costs (including restrictions on fair-use

copying) then they would be protected against

Government-initiated antitrust lawsuits. Private antitrust actions could still be initiated

but the deference generally given to such Government actions in rule-of-reason cases (as

this would be) would likely discourage private

plaintiffs.

Special industry exemptions from the antitrust laws are rare and frowned upon by the

Department of Justice, and the success of an

application for exemption in such circum

pp

clusivity agreements,57 it would seem unlikely

that Congress would grant such an exemption, if it were not willing to require recording

equipment to contain anticopying devices.

Consumer Resistance

Technological copy protection would likely

face resistance from some consumers, particularly in the case of home audiotaping.58

Although the OTA survey found the public

unsure about the fairness of home copying to

the copyright owners, they clearly opposed

any restrictions on copying. The majority considered changes such as copy protections or

fees to be unfair (see ch. 6). Therefore, unless

there were legal prohibitions on doing so –

and perhaps even if there were — consumers

might be inclined to circumvent them if possible, or even to purchase devices to circumvent

the protection. Unless prohibited and policed,

“gray markets” would likely emerge for recorders without copy-protection or for modified machines.59

Provisions for Fair-Use Copying

Any copy-protection technology would

have to accommodate fair-use copying (unless the concept of fair use was narrowed) and

allow copying of a work once its copyright

had expired and it was in the public domain.60

Special classes of recorders, software, and/or

blank media might be required for certain

~T~b]lc ~w 96-308, codified at 15 USC 3501.

~In the case of computer sofiware, COpy protection has almost disappeared because of consumer resistice and preference for

unprotected software; protected software was diflicult or impossible to back up for archival purposes or use with a hard disk.

s~ince 1~, there has &n an active gray market for DAT recorders.

eOFor emple, a music student might want to copy a particular piano passage – as pkiyd by three different Pianists – to StUdY

differences in technique and expression. Many individuals who are not fl~ll-time students or “professional” musicians, composers, or

songwriters are actively interested and involved in the study and/or creation of music.

Some believe that the prospect of private use in an era of digital technologies is so disastrous that the doctrine of fair use itself

should be repealed. (Eric Fleischmann, “The Impact of Digital Technology cm Copyright Law,” Journal of the Patent Ofi Society, vol.

70, January 1988, pp. 5-26. )
pg p

agreement between the recording industry

and consumer-electronics manufacturers was

announced. The parties agreed to seek legislation requiring a new DAT format to control

multigenerational digital copying on DAT recorders (see details in box l-E). This technological copy protection, called Serial Copy

Management System (SCMS), would restrict

multigenerational copying o f digital

audiotapes copied from analog sources or

copyrighted digital sources. However, firstgeneration, direct digital-to-digital DAT copies of CDs or other digital sources would not

be restricted.

Compulsory Licenses

An alternative to prohibiting home copying

entirely would be to grant some type of compulsory license to home copiers, with or without use of copy-protection technologies. A licensing system would also allow reciprocal

arrangements with other countries for the

payment of home-copying royalties.

One option would be to attach a fee to recorders. Alternatively, a compulsory-licensewith-royalty could be combined with copyprotection devices in recorders, to allow

“metered” copying.61 Another option would

be to attach a royalty fee to blank storage media. The option of a temporarily free compulsory license would preserve some flexibility

61 C)ne prom~ apprmch to this would be to se]] “debit cards, ” carryinga preset value, which could b used to override copy-protect

codes. The card would be inserted into the recorder, which would use a microprocessor to debit the card for the fee and record the

identity of the material copied on the card or in the recorder’s memory. If the “empty” cards were returned, the record of material

copied could be used to distribute fees to the copyright owners. (OTA staITinterviews with recording-industry engineers, December

1988. )

For a description of magnetic-stripe or microchip “smart” cards and their uses in debit systems, see: U.S. Congress, O!lice ofTechnology Assessment, “Electronic Delivery of Public Assistance Benefits: Technolo~ Options and Policy Issues,” OTA-BP-CIT-47

(Washington, DC: U.S. Government Printing OffIce, April 19S8).
If the licensing approach were to be pur

sued, Congress would have to choose:

where the royalty fees would be levied –

on the blank recording media, on recorders, or both;

how the royalty fees would be set–by

whom and according to what standards;

and

how and by whom the revenues would be

distributed.

There are a range of opinions on all of these

issues. Several other countries have established home-copying royalty systems, and

Norway and Sweden have each established a

private-copying tax instead of a royalty system. In evaluating the appropriateness of

these systems for the United States, political,

legal, social, and market differences need to be

taken into account (see ch. 5). Furthermore,

some hardware and media might have multiple uses– e.g., DAT for audiotaping or computer data storage. This requires that even

“narrow” options (e.g., a fee on media) must

be considered in a broader technical context.

Levying the Fees

Fee on Recording Media–This approach has been followed in several countries,

including Austria, France, Finland, West Germany, Iceland, Portugal, and Hungary; West

Germany and Iceland also impose fees on recording equipment. None of the royalty

time, a percentage of the price, or per unit.

Proceeds are distributed among the authors,

performers, and producers of copyrighted recordings, based on distribution schemes developed by the individual countries (see table

5-1).62

Proponents of this approach consider that a

fee on recording media is a more precise measure of how much copying is actually being

done than a fee on the sale of the recording

equipment. However, because media can be

used for purposes other than unauthorized

copying, it is not an exact measure. Some proposals have considered making distinctions

between different types of recording media,

such as tapes used for noncopyrighted material and those used for taping copyrighted

music. A meaningful distinction by presumed

use can be difficult to draw, however, since an

audiotape meant to be used for lectures, dictation, etc. could just as well be used to copy

copyrighted music. Distinctions based on different factors such as capacity, price, or quality have been suggested. OTA considers that

the likely blurring of niche boundaries will

make it increasingly difficult to distinguish

between the various recording media available – for example, the same medium might

be used to store copied music or computer

data. Congress will have to be careful in crafting legislation to avoid being overly specific in

using terms like “tape” or ‘(blank)’ that create

loopholes in the law,63 especially in light of

new storage technologies.64

mpr[X~s from b]~k+udiotape ]evies in 1987 r~@ from at)out $3.2 mi]]ion in Finland to $15.3mi]]lOn in West @rmany. Figures

from 1988 indicate that revenue from France’s blank-tape levy amounted to $16.3 million.

63 For instance one way t. avoid the f= might ~ t. se]] tapes that were not comp]ete]y blank but were intended to be recorded over,

64 fiture innovations might entit)]e Consllmers t. make copies on computer disks, optica] discs, microchips, etc.
On July 28, 1989, representatives of the international recording industry and several consumer electronics

manufacturers announced the outcome of a series of working group meetings to negotiate joint recommendations on technological means to limit DAT copying. A Memorandum of Understanding (MOU) was signed in

Athens, Greece in June 1989, and subsequently ratified by the participating parties. According to a background

paper prepared by the RIAA and EIA,

“The sole purpose of the Memorandum is to agree on joint recommendations to governmental authorities –the U.S. government, the European Commission, the Government of Japan, and other governmental bodies – as to a format for DAT that accommodates public policy concerns of consumers, artists, and

industry, The only respect in which this Memorandum has any force or validity is the obligation to support the agreed recommendations to governments, and to plan further meetings addressing possible future recommendations to governments. The Memorandum and the discussions leading to it do not address, and have not addressed, any private business conduct or decisions. ”

The recommended format for DAT is based on a version of the Philips “Solo-Copy” method for limiting serial

(multigenerational) copying (see ch. 2 for a description of technical alternatives for restricting copying). The

format, now called Serial Copy Management System (SCMS), would allow DAT recorders to be used for direct

digital-to-digital copying, but would restrict making digital-to-digital copies of the copies. As proposed for DAT,

SCMS would not affect home tapingo n conventional analog recorders. However, only one additional generation

of copies of DAT tapes copied from analog inputs could be made.

In addition to the International Federation of the Phonographic Industry (IFPI) and RIAA, 15 European and

Japanese consumer electronics companies participated in the working group that developed the MOU: Fujitsu

General Corp., Grundig, Hitachi Ltd., Matsushita Electric Industrial Co. Ltd., Mitsubishi Electric Corp., NEC

Home Electronics Ltd., Philips International B. V., Pioneer Electronic Corp., Sanyo Electric Co. Ltd., Sharp

Corp., Sony Corp., TDK Inc., Thompson Consumer Electronics, Toshiba Corp., and Victor Company of Japan

Ltd. EIA was not a participating party to the MOU, but was represented in Athens as an observer, and subsequently endorsed the United States legislative goals recommended in the MOU. SCMS standards will be proposed to the International Electrotechnical Commission.

According to EIA and RIAA, the objective of the agreement in the MOU is “government implementation” of

the recommendations -i.e., mandating implementation of an SCMS standard– worldwide. In the United

States, the EIA and RIAA have (as of August 1989) agreed to ask Congress to consider legislation implementing

the recommendations and to work jointly to support its passage. Absent legislation, the parties are not bound to

implement SCMS.

Serial Copy Management System (SCMS)

SCMS controls “serial” digital copying on DAT recorders — copying second, third, and successive generations of DAT tapes from a first-generation DAT copy. According to an EIA/RIAA background paper, SCMS will

allow any original prerecorded work (e.g., a record, tape, or CD) to be copied indefinitely onto different blank

DAT tapes. However, SCMS will limit the number of digital-to-digital copies that can be made from the copies,

unless the source material is both digital and “unprotected”.

As proposed, the SCMS standard for DAT would be implemented with a special chip (reportedly under development). With SCMS, the DAT sampling rate would he the same as the CD rate, allowing direct digital copying of

CDs. Although earlier consumer-model DAT recorders might be retrofitted with the SCMS chip once it became

available, the earlier models operate with a different sampling rate and do not permit direct digital copying of

CDs.

The SCMS chip would be programmed to read copyright coding information already in the digital subcode

channels of digital recordings and broadcasts. These channels are separate from the music channels and include

“category codes” indicating what type of digital device is being used as the source (e.g., a CD player, whose output

is protected, or a microphone with an internal analog-to-digital converter, whose output is not protected) and

“copyright flags” indicating whether or not the material is marked for copyright protection. DAT recorders with

SCMS chips would use the combination of the category code and the copyright flag to determine whether copying

Continued on next page
digital source (e.g., CD) and if it were marked for copyright protection, a code of 1,0 would be written onto the

DAT copy as it was being made. Then, if a DAT recorder detected the “1,0” code on digital material, the record

function would not operate. By contrast, if source material were being copied from a digital microphone and were

not copy protected, the DAT recorder would write a code of “0,0” on the copied tape, and future serial copying

would not be limited.

SCMS also limits the number of generations of copies that can be made of source material entering the analog inputs of a DAT recorder. Current technology does not permit identification of copyrighted material in the

analog domain. Therefore, material (including analog cassettes, LPs, or radio broadcasts) recorded via the analog inputs would be marked with a copy-protection code of “1,1” in the DAT copy’s digital subcode channel. One

more generation of digital-to-digital copies could be made from this tape; the second-generation copy would be

marked with a “ 1,0” code and could not be copied on a DAT recorder.

Other Home-Copying Issues

The agreement to seek legislation mandating the SCMS standard for DAT leaves open the question of royalties (e.g., on blank tape and/or recorders) for home copying. According to an RIAA press release, the MOU states

that the three European signatories acknowledge that they accept the principle of royalties and will not oppose

efforts by the recording industry to secure legislation implementing royalties for private copying. The Japanese

signatories acknowledge that the recording industry places extreme importance on royalties for copying that is

permitted to continue following the adoption of any technical standards. All parties to the MOU agreed that the

adoption of technical standards should not be relied upon as a basis for supporting or opposing royalties.

RIAA has announced that, although it continues to strongly support royalties to compensate for the DAT

copying permitted by SCMS, it will not pursue royalties in the 101st Congress. RIAA has stated that it does intend

to pursue royalties subsequent to legislation requiring SC! MS.

The signatories to the MOU have committed to discuss several other copying-related issues, including recordable and erasable compact discs (CD-R and CD-E) and development and implementation of SCMS in the analog

domain.

SOURCES: RIAA, “DAT Agreement Reached” (press release), July 28, 1989; RIAA and EIA, “Agreement on Recommendations to Government as to DAT” and “The Serial Copy Management System (SCMS): How It Works” (background papers), July 1989, TV Digest, vol. 29, No. 36, Sept. 4, 1989.

If a home-copying royalty were attached to opting to record music on tapes of inferior

blank media, the consequences for home

copying are unclear. Possible outcomes could

include: no change in the amount of home taping taking place; a decline in sales of blank media, with consumers buying fewer tapes, but

reusing them more often or becoming more

selective in what they tape;65 consumers buying prerecorded material with the intention of

making more than one copy to trade with

friends, thereby spreading the costs; and/or in

the case of exemptions for certain types of

tapes (i.e., tapes of lower quality), consumers

quality rather than to purchase higher-quality tape subject to the fee.

Fee on Recording Equipment – The rationale for this approach is that a fee placed on the

sale of the recording equipment reflects the

ownership of copying equipment. However,

this would not reflect the number of copies actually made. Unless categories of hardware

(or purchasers) were exempted, all purchasers

of recording equipment would pay the fees, regardless of whether the equipment was used

‘35 For exmple, many consumers listen to their recent purchases for about a month and then llbrary them.
never use their recorders to copy prerecorded

music.

For this type of royalty system, equipment

would have to be classified according to use,

whether as players or recorders. It would also

be necessary to distinguish between recorders

used for copying copyrighted material, such

as music, and those used for recording noncopyrighted materials, such as lectures and

dictation.66 For “all-in-one” systems, in which

all the components are sold together as one

product, it would be necessary to decide

whether the royalty fee would be levied on the

whole system or only on the recorder.67

If a home-copying royalty were levied on recording equipment, several consequences for

home copying are possible, including: no

change in the amount of home copying; an

overall decline in hardware sales; or a lag in

the sales of new recorders, with consumers

opting to retain their old recorders rather

than purchase a new one subject to the levy.

Fee on Both Media and Recording Equipment– This approach has been adopted by

such countries as Iceland and West Germany.

Some proponents argue that a fee on both the

hardware and the recording media is more appropriate, since both the hardware and the recording media are necessary for copying. They

also argue that a more equitable return to the

affected parties is ensured since both the

manufacturers of the recording media and

hardware will have to share in the payments

to the rights owners. The levy would likely be

A royalty on media and equipment may give

the impression that consumers are being double-charged. Such perceptions might motivate consumers to buy only limited quantities

of recorders capable of making home copies,

and to purchase players (as opposed to player/

recorders) for the car, travel, etc.

Setting the Fees

Amount-A theoretical approach to determining the amount of a fee to place on the recording equipment and/or tape would be to attempt to determine a comprehensive estimate

of the overall net financial impact of home

taping on copyright holders. Any estimate of

this sort, however, depends on assumptions,

and different assumptions can yield a broad

range of plausible (and sometimes implausible) estimates.

Three practical approaches used abroad for

royalties on media are:

1.

2.

3.

a flat fee, regardless of price or capacity; 68

as a percentage of the price; and

based on the capacity (playing time) of

the recording medium. 69 -

In most countries where a royalty on recording media has been established., it is based on

playing time, although the capacity of new

media will vary depending on the type of material being stored (e.g., compact-disc storage

of audio or full-motion video).

BeThis distinction might be more di~cu]t than it appears, since a recorder typically used for recording noncopyrighted materials

can also be used to copy music.

6~anufacturers might ~so think abut de]etingthe recording feature from “d-in-one” systems if the fee were ~sed on the cost of

the entire system.

68~me have ~riticiz~ this approach on the Wounds that the roy~ty cm a tape of inferior W&dity will be the same as that on one of

superior yuality and the latter is more likely to be used to tape recorded music.

r3~me ~]ieve that the latter is most appropriate, since playing time is the best measure of how much home ~ping is ~ingdone.
ecodg equpet. t ee gt be s

pler to administer than one based on price.

However, some argue a flat fee would be inappropriate because the royalty on an inexpensive recorder would be the same as that on one

with more features, and the royalty will be reduced if it is pegged to the price of less-expensive recorders.

Special fees might be adopted for dual-cassette and dubbing machines that make tapeto-tape copies. If a royalty surcharge is placed

on this type of equipment, the result maybe a

decrease in the sale of dual-cassette recorders,

as well as decreased sales of prerecorded cassettes. Home tapers might opt to buy more

CDs and records and tape from them.

Incidence and Exemptions – Congress

would have to decide whether home-copying

levies would be collected from manufacturers

or consumers. If the levies were collected from

manufacturers, they will likely be passed on to

consumers through higher prices. If the

manufacturer were responsible for the fee, decisions will have to be made as to whether retailers will have to special order exempt tapes/

equipment, and as to how royalty-exempt

consumers will be able to recover the royalty.

Unless there are provisions for exempt consumers to special-order tapes and/or equipment, everyone would be subject to increased

prices at the point-of-sale.

If the consumer were responsible for the

payment of fees, it would be necessary to decide how individuals will prove that they are

eligible to receive an exemption. Would they

also have to prove that they will not use tapes/

equipment to copy copyrighted music? If so,

how would they go about proving it? What

would happen if a customer wants to buy

tapes in bulk, and doesn’t yet know whether

Photo Credit: Courtesy of Gene Bachero and the Casuals

Home musicians make practice tapes

he will use them to tape lectures or music?

Would that individual be able to purchase

royalty-exempt tapes/equipment at the retail

store, or will he have to fill out a form to obtain a rebate? Either method would involve

more work for both the retailer and the customer. The task of having to fill out additional

forms and/or provide proof of exemption

might deter some individuals from seeking reimbursement.

It has been suggested that exemptions be issued to professional users, to handicapped

persons, 70 

on exports, on equipment or tape

found to be “unsuitable” for the home taping

of music on the basis of “technical criteria”

such as reproduction quality (i.e., business

dictation machines and micro cassette

tapes),

71 and on machines that are not designed to copy (i.e., microphone-only recorders and playback-only devices). If exemptions

were given to “professionals,” this term would

have to be defined to indicate who qualified

for exemption– home musicians, for example, may also use consumer-model recorders

during practice sessions or to work on new

701f exemptions are ma(]e for hmdicapped persons, would they be issued to organizations representing them, or to inditiduds?

71 ~me r~orders, a]though not most suitable for recording copyrighted music, are nonetheless capable of doing SO.
yy, 

Administering and Distributing

Home-Copying Royalties

As discussed above, home-copying royalties

could depend on the type of copyrighted work

being copied (e.g., recorded music, television

broadcasts, etc.) and/or the identity of the

copier (e.g., the handicapped, students, members of the general public, etc.). The royalty

fee might even be set arbitrarily low for some

or all classes of users.72 The question of how

the royalty scheme should be administered

and how royalty revenues should be distributed would have to be addressed.

Chapter 5 discusses proposals for the administration and distribution of audio homecopying royalties, including the provision proposed in the Home Audio Recording Act

introduced in the 99th Congress. For this discussion, we proceed on the assumption that

royalties for home copying should be claimed

through efficient centralized collection/distribution societies, rather than by individual

copyright holders making claims against

manufacturers, importers, retailers, or consumers.

Administration –Administration of a home

audio copying royalty might be assigned to an

already-existing organization, such as ASCAP, BMI, SESAC or the Harry Fox Agency.73

Other types of copying-rights organizations,

like the Copyright Clearance Center, which

collects and distributes photocopying royalties, might also be considered.74

pppyg p

formance (namely, radio air play) are similar.

The Harry Fox Agency collects mechanical

royalties (based on sales), so that using its database as a basis for distribution would presume that patterns of copying and purchasing

are similar and the best-selling works are the

most copied. Both models (copying is associated with air play, copying is associated with

sales) are arguable; it may be that the less

popular or less accessible works are copied

more, for convenience or because consumers

do not value them highly enough to be willing

to pay the retail price.75 One potential advantage to using an existing society’s structure is

that the administrative expenses would tend

to be lower, compared to starting an entirely

new organization. The structures of these particular organizations, however, are such that

recording companies and performers (who are

not composers or songwriters) would have little say in their management.

Another possibility might be to expand the

responsibilities of the Copyright Royalty Tribunal (CRT) to include determining and distributing home-copying royalties, but this

would require additional staff and funding.

Under the compulsory licensing provisions of

the Copyright Act of 1976, the CRT (an independent agency in the legislative branch) is

currently responsible for determining and distributing royalties from cable retransmission and public performances on jukeboxes,

and for determining the royalty rates for

phonorecords and some public broadcast

transmissions. But cable retransmissions are

relatively easy to monitor, compared with

home copying.

T~his Wou]d & somewhat ~aIOwUS to the “health care” exception proposed during the IOOth Congress to permit the unauthorized but noncommercial performance of audiovisual works for patients in health care facilities. See U.S. Congress, Congressional

Research Service, “Videocassette Recorders: Legal Analysis of Home Use)” Douglas Reid Weimer, Jan. 10, 1989, p. 13.

Ta~ Ch. 5 for a de~ription of these organizations.

TZJ. men, Copyright C]earance Center, personal communication, Apr. 28, 1989.

TsThe study!s ad~~vwe] members were of divided OpiniOn on this.
ces coud be gvevoce te og

tion’s management. There are two disadvantages to this approach: 1) startup costs would

be higher; and 2) it would take time to set up

the organization and its procedures. It might

take some time before startup costs were met

and the bulk of royalties were actually distributed. Moreover, setting up a new organization

is not easy or trouble-free.

Whichever general approach (augmenting

an existing administrative infrastructure or

establishing a new one) were chosen, the

source of operational funding would have to

be determined – whether it was intended to be

self-supporting (via overhead charges on collected royalties) or supported by appropriated

funds.

Distribution – Distribution of audio homecopying royalties raises some questions:

Should the proceeds go as directly as possible

to the persons and legal entities whose rights

are being used and whose interests (it has been

determined,) are being harmed by home copying? If so, then royalty revenues would be distributed in some fashion among established

recording companies, songwriters and composers, music publishers, singers, musicians,

studio personnel, etc.76 But if Congress considers that a major reason to grant rights over

ppgp

tion may be warranted for these classes of potential beneficiaries.

Should the distribution be based on sales, performances, both, neither? Basing the distribution on sales or air play maybe inexact. More

importantly, Congress might consider that extra incentives (via these royalties) are more

desirable for struggling or new talent, or for

genres like classical music. This would, however, promote works by new talent at the expense of the established, or subsidize less

popular material at the expense of material

with a larger market.

Other countries with home-copying royalties have followed a number of approaches to

the above,77 and if Congress were to establish

a royalty scheme for home copying, it might

choose to reserve at least some portion of the

proceeds to nurture new talent or certain

types of works or performances, like classical

or “new” music. If, for instance, the effect of

home audio copying that concerned Congress

the most was that it diminished market incentives for producing the work of new artists,

then some home-copying royalties could be

targeted to provide financial incentives for

productions or performances that would not

otherwise be attempted. 78 The Music Performers Trust Fund, for example, is a fund set

mFor ~xmp]e) t. provide incentives to mists to continue to develop new materiid, it might be desirable to give a Portion of the

royalty directly to the performing artist, rather than give a larger portion to the record company to allocate according t o contractual

provisions. On the other hand, givinga larger share to the record company might give it more incentives to record new acts and material.

77& Ch. 5. In France, for examp]e, prweeds from the audiotape tax are divided unequally among authors, Performers and producers. In Belgium, the proceeds from a proposed levy on blank tape would be split, with half going to artists, authors and recording

companies, and the other going to support artists and cu Itural institutions in Belgium three language communities. In Iceland, proceeds from the levy on blank audiotapes are allocated to performing artists and producers, composers and writers, the performers’

share is deposited into a fund to be used for the promotion of the profession, particularly for music schools. In Sweden, tape tax revenues are turned over to the government, which uses two-thirds for unspecified purposes; of the remainder, most is put into a cultural

fund, with a small portion divided among the author, performer, and producer. In West Germany, royalties are collected on blank tape

and on recorders. Revenues are distributed among the various collection societies for music authors, performers, and producers, and

lyric authors, which then distribute royalties to their members,

78~though top r~ording mists, Corn ~sers, and songwriters might object that this would deprive them of their due, there would

seem to be at least some justification for such an action. The recording industry already relies on the large profits from their most

successful releases to subsidize new releases, since the targeted monies would be used to finance new releases, at least some would

flow back to the recording companies anyway,
py 

g 

the continuation of live public performances, who participate in the performances.

such as performances in nursing homes, pub-
Chapter 2

Technological Change

and Home Copying
Page

INTRODUCTION ● ..*. ... ..** **. ... ... ... ..** .*. .m. ... ... ... .m *. 37 *

DIGITAL REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

EROSION OF NICHE BOUNDARIES .*9* **** ..** *e. *.. * * o * *****...* 47

DIRECT ELECTRONIC DELIVERY . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . 50

TECHNOLOGICAL COPY PROTECTION . . . . . 0 . . 0 . . . . . . . . . . . . . . . . . . . 52

Audio Recordings ... *. ****99*..**.**.****...*..***.**..**..  56

Serial Copy Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

CBS Copycode System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Video Recordings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Summary .** . **** ..*. ..m*. **. *.*. ... **** *9e*. ***. .*. ... .. **n. 61

Page

2-A DAT: How It Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

2-B. Analog Cassette: How It Works.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

2-C. Digital Audio Tape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

2-D. How Compact Discs Work . . * . . * * * * * * * * * * * . . * * . * * . * * . * ******..* 45

2-E. How Compact Discs Are Made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

2-F. Other Digital Formats Using CD Technology . . . . . . . . . . . . . . . . . . . . . 48

2-G. New Infrastructures and Services .. a . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

2-H. Transaction-Based Distribution Systems . . . . . . . . . . . . . . . . . . . . . . . . . 54

2-I. Systems to Copy Protect Sound Recordings . . . . . . . . . . . . . . . . . . . . . . 59
INTRODUCTION

Copyright law defines the boundaries between permissible and prohibited uses of copyrighted works. These boundaries are based on

copyright’s intellectual property bargain, 1

tempered by the feasibility and efficiency of

enforcement. Technology, driven by the social

and economic objectives of its users, defines

the frontiers of possible uses and feasible enforcement. Technological changes that substantially alter the nature and extent of possible uses, or the feasibility of enforcing

prohibitions against certain uses, give rise to

tensions between users and copyright proprietors.

Technological change as it relates to copyright presents a major challenge to government policymakers, who must continually

seek to define and maintain the appropriate

relationship among policy, the laws implementing it, and the consequences of technological change. While technology and the law

are fundamentally interrelated, new uses of

technology should not, in themselves, have

the force of law.

New uses of technology can, however, exploit

persistent ambiguities in existing laws, and by

making possible — or prohibiting — selected actions, they can have the effect of lawmaking.

This may be happening for copyright. Therecording industry considers that the growth in

and current prevalence of home audiotaping

have created a situation in which persistent

ambiguities in the law have been exploited to

the point that consumers believe that they

have a “right” to tape.2 On the other hand, any

industry agreements resulting in technological copy protections implemented in the

works themselves and/or in recording devices

would redefine “possible” uses and would effectively shift the boundary toward the prohibited. From the public’s viewpoint, the result would be equivalent to a change in the

copy-right law. Moreover, although home

copying would be the intended target for these

copy protections, they could potentially limit

the doctrine of fair uses

The debate over home audiotaping, which

prompted Congress to request this study, is a

situation in which technological change has

strained ambiguities in the current law to the

point where copyright proprietors have petitioned for legislative relief from the projected

consequences of new copying technologies. In

this instance, new consumer products would

enable users to make digital copies of copyrighted recordings in their homes, at a time

when digital recordings (i.e., compact discs)

were becoming increasingly important to record companies’ profits. Multigenerational

digital copies (i.e., “clones”) could be produced with no loss of quality.’ In support of

‘The bargain is a balancing of social objectives: encouraging the production and dissemination of diverse new works (by providing

economic incentives for creators via a limited monopoly) and encouraging widespread access to and utilization of works. See Znteliectual Property Rights in an Age of Electronics and Information, OTA-CIT-302 (Melbourne, FL: Kreiger Publishing Co., April 1986),

especially ch. 2 and ch. 7, for more on the intelktual property bargain between creators and the public, and how it is changing in an era

of electronic information.

~his point was raised in RIAA commentson a draft of this report. (H. Rosen, U, letter toJ. Winston, O’I’A, May 2, 1989. Encbsure with comments on cirafl ch. 9, p. 1.)

s~thollgh Copy–prot=tion technologies would not necessarily prevent all copying under the dtirine of f~r u% speci~ Provisions

and exceptions would have to be worked out to allow fair-use copying. Even so, transactional or “hassle” costs for individuals would be

higher, perhaps discouraging some fair use.

4Another example is the debate over videocassette recorders and home videotaping, which is being reopened by the Motion Picture

Association of America (MPAA). The MP&l is calling for technological means to prevent home recording of movies shown on pay

cable, or delivered by premium satellite or pay-per-view services. (Jack Valenti (President/MPAA), “Viewpoints,” Television/Radio

Age, Feb. 6, 1989, p. 91.)

37
g y , 

(RIAA) has argued that the technological

change from analog to digital recording will

greatly increase home copying, so as to seriously threaten the industry’s economic viability. Considering that sound recordings have

historically had inadequate copyright protection, compared with other types of works,6

copyright proprietors (for both the music and

the sound recordings) have called for Congress to enforce what they consider to be the

existing boundaries of copyright.7

The legal status of home audiotaping and

other types of private use is ambiguous, however (see ch. 3). Although the status of some

specific private uses has been determined

judicially, current legislation does not provide

explicit guidance as to whether copyright proprietors’ rights extend to noncommercial private uses. Many believe that they do not. Others consider that home audiotaping, at least,

is noninfringing under the doctrine of fair use.

From either of these perspectives, proposals

to extend proprietors’ rights can be regarded

as a call for Congress to strike a new intellectual property bargain, in which unrestricted

and/or uncompensated home copying of audio

At the same time, some copyright proprietors are pursuing unilateral and/or cooperative industry measures to implement technological means for copy protection. Such

protective measures would shrink the frontier

of possible uses of works, which would in effect shift the boundary of permissible uses–

including some fair uses as defined in the 1976

Copyright Law.8

The 1986 OTA report, Intellectual Property

Rights in an Age of Electronics and Information,9 broadly examined the impacts of new

technologies on the enforcement of intellectual property rights, including the right to

control reproduction of copyrighted works,

the right to control publication and performance of works, and the right to control the

making of derivative works. That report

found that technological changes offer opportunities for social and private gain at the same

time that they challenge the current business

and legal environments.10 For example, technologies that lower the cost and time required

to copy, transfer, or manipulate information

and intellectual property can make works

more accessible, make them more valuable to

s*, for exmp]e, the Home Audio Recording Act, S. 1739, 99th Cong.; or H.R. 1384 ~d S.508 in the looth Cong.

eThis ~evint was present~ by C. Sherman (Arnold and Porter, representing the RML4) at the study’s final advisory we] meeting on Apr. 24, 1989. Sherman also considered the distinctions in OTA’S analysis of electronic-delivery -versus-performance (see

below) to be “perilous” ones that proprietors of other types of works did not have to deal with.

7&cordingto the RJAA, “... the music industry has consistently maintained that home copying is i]]egal undercurrent copyright law

and has simply sought legislation to make copyright protection more than an empty right. ” (H. Rosen, RLAA, letter to J. Winston,

OTA, May 2, 1989. Enclosure with comments on draft ch. 9, p. 1.)

6For emp]e, ~pfingbrief excerpts from one or more “technologically copy-protected” r=ordings, for the Purposes of teaching or

criticism, would be problematic.

The recording industry does not consider that technological copy protection would eliminate copying permitted under the doctrine

of fair use and takes the position that legitimate fair uses should be preserved and that exemptions should and could be worked out.

(H. Rosen, R.VW, letter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 9, p. 12. )

gOTA_CIT-302, op. cit., footnote 1.

I OAt this study’s find advisow pane] meeting on Apr. 24, 1989, some panel members reemphasized the challenges that new technologies present for the current copyright system, which they considered to be nearing obsolescence, but dauntingly complex to overhaul.

For a more complete discussion of technological changes and the enforcement of intellectual property rights, including impacts on

print, music, video, and other media, see OTA-CIT-302, op. cit., footnote 1, pp. 97-123.
forcing intellectual property rights more diff

cult, and may lower rights holders’

expectations of economic returns. If so, this

might reduce creators’ financial incentives to

produce new works. Furthermore, the 1986

report noted that enforcement of intellectual

property rights will potentially be more intrusive, as copying, transferring, and manipulating works become private activities in the

home.

The Copyright and Home Copying study

focuses on one type of intellectual property

protection – copyright — and one venue — the

home. The study’s empirical work examines

the home use and/or taping of copyrighted

audio materials and, to a lesser extent, video

materials. The copyright issues raised by

home audio- or videotaping are enmeshed

with broader questions about the general

status of private use, including home copying. Because the current copyright law gives

little guidance on private use, especially

whether private use is an infringement of

copyright, the question remains whether the

overall objectives of copyright are best served

by granting copyright proprietors exclusive

rights over home copying, including the

rights to be compensated for and/or to prevent it.

Up to now, the courts have applied the doctrine of fair use, absent other statutory guidance, to make explicit but limited and nicheoriented determinations about home copying

and other private uses of specific categories of

copy-righted works. Leaving these determinations to the courts, as specific cases arise, has

allowed Congress to avoid premature or

short-lived copyright legislation, and has

helped maintain flexibility in the face of

changing technologies.

explicit congressional definition of the legal

status of home copying more desirable to reduce legal and market uncertainties and to

prevent de facto changes to the copyright law.

These trends are:

The movement to digital representations

of music, video, and other types of entertainment and information available to

consumers. With these come new digital

recording technologies for home use, and

more powerful means for home users to

interact with and manipulate digital

works, as well as to make derivative

works.

The erosion of niche boundaries used to

categorize copyrightable works according to their content (e.g., audio, video,

computer software) or physical format

(e.g., audiotape, videotape, computer

disc).

The emergence of new delivery infrastructures to bring music, video, and

other forms of information and entertainment into the home (e.g., fiber optic

cable, pay-per-view, and interactive cable services).

The efforts of some copyright proprietors (e.g., in sound recordings and motion pictures) to develop and implement

technical means for copy protection.

Some industry stakeholders do not consider that the ambiguous legal status of home

copying represents a “problem” requiring any

additional legislation to deal with home

audiotaping. In part, this position reflects the

view that the doctrine of fair use is sufficiently

adaptable to address home audiotaping, at

least, and that Congress intended for the

courts to use this “safety valve” in dealing

with home copying.11

1 IGW J. Shapjro, E]~ronic Industries Asmiation, Apr. 28, 1989, letter to OTA with comments on dr~ ch. 5, PP. 1>5.
Digital audiotape’s transport system (left) works just like that of a videocassette recorder. Once inserted in

the deck, the cassette’s protective lid opens and the tape is extracted and wrapped 90 degrees around the headbearing drum. As the tape moves past the drum from left to right at 1/3 inch per second, the drum moves counterclockwise at 2,000 rpm (middle). This combination yields a recording speed of 123 inches per second —65 times

faster than today’s analog cassette decks. Because the tape is held at an angle to the drum in a helical pattern, the

drum’s two magnetic heads write and read information in diagonal tracks across the width of the tape instead of

longitudinally along its length, as in analog recording (right). This space-saving arrangement provides 2 hours of

information on a matchbox-size cassette. Because each of the two heads is mounted at a different azimuth, the

information-bearing tracks are laid down in an alternating pattern.

Transport System Rotating Head Track Scheme

Reprinted from Popular Mechanics, July 1987.

Copyright The Hearst Corporation. All rights reserved.

Continued ambiguity about congressional the market uncertainty will impinge on

intent and the legal status of home copying

may, however, become undesirable, for two

main reasons. First, the legal ambiguity gives

rise to market uncertainty. As new digital formats and recording technologies develop,

hardware and software producers will become

even more interdependent: just as for computers and computer software, decisions

about technical standards and formats made

by one industry will critically affect the

other.12 Because of this mutual dependency,

broader groups of stakeholders, including the

public.

Continued uncertainty blurs market signals and raises business risks for hardware

and software producers alike; pricing and output decisions are more difficult. Potential offerings of new products and services may be

delayed or withheld; delays and/or limited

markets have real costs for consumers and

producers:

lzIndustV sfidmds determine the ~m~tibi]ity and features of different hardware and/or sollware products. For more m indUStry standards and their role in determining markets, see U.S. Congress, Office of Technology Assessment, Critical Connections: Communicxdions for the Future, OTA-CIT-407 (Washington, DC: U.S. Government Printing O~ce, forthcoming).
In analog cassette recording, a nonrotating

freed head enters the housing to press against the

tape. The tape passes by the head at 17/8 inches

per second, and separate tracks for the left and

right stereo channels are recorded simultaneously along the length of the tape. When the first

side is recorded, the cassette is flipped to record a

second set of stereo tracks on the remaining

width of the tape. In DAT recording, just like

videotape, there’s no need to flip the cassette.

Reprinted from Popular Mechanics, July 1987.

Copyright The Hearst Corporation. All rights reserved.

. In 1987, the RIAA threatened to sue the

first manufacturer selling consumermodel digital audiotape (DAT) recorders

in the United States. (See box 2-C.) Many

consider that this threat is largely responsible for consumer-model DAT recorders being withheld from the U.S.

mass market for the past 2 years. In late

April 1989, one manufacturer began importing and selling modest quantities of

reportedly expects to sell about 500 of

the ($10,000) machines in the first year,

while consumer models with more limited features typically sell for about

$1,500 in Japan and Europe.13

The July 1989 Memo of Understanding (MOU) between the international recording industry and several consumerelectronics manufacturers (see box l-E)

may eventually lead to mass introduction of DATs with copy-limiting features.

However, early press accounts of reactions to the agreement indicated that

hardware industry executives considered

it unlikely that DAT recorders manufactured with the special features could appear on the market before spring 1990.14

Some copy-right holders and music publishers also expressed concerns that the

legislative objectives did not include royalties.15

Another emerging digital technology

(recordable/erasable compact disc) faces

similar uncertainties– some copyright

proprietors have already branded it as “a

worse problem” than DAT.16 A Japanese

firm announced sample-size shipments

of write-once, recordable compact disc

(CD-R) recorders in late 1988, with the

initial market intended to be limited to

professional applications as an editing

tool for CD-ROMs or for small-lot production of CDs or CD-ROMs. To minimize copy-right-related controversies,

another firm selling blank discs announced that it did not plan to supply

I sJe~ ~=nb]uth,“~fying R&4 Threats of Lawsuits, Nakamichi Importing DAT players, ” Variety, Apr. 26- May 2,1989, p. 208.

IA~ Di~St, VOI. 29, No. 31, July 31, 1989.

l~~Diges~, vol. 29, No. 32, Aug. 7, 1989.

‘

s

’’ Recording CD Worse than DAT--IFPI/R.IA&” TVDigest, vol. 28, No. 45, Nov. 7, 1988; “Blank and Erasable CDs Prompt Fears of

Piracy in Trade Group,” Variety, Nov. 23, 1988, p. 96.
Rotary-head digital audio tape (R-DAT, usually referred to as DAT in this report) is a format with consumerente “ rtainment and computer data-storage applications. For consumer entertainment, the DAT format permits

high-quality digital recording/playback of CD-quality music. The current DAT standard specifies two basic operating modes: a 44.1 kHz sampling rate (the same as for audio CD) for playback only, and a 48 kHz sampling rate

for recording and playback. The 44.1 kHz mode can playback either prerecorded tapes made (in real time) from

CD master tapes or prerecorded tapes made using high-speed contact printing. As of mid-1989, most consumer

models operated at the 48 kHz rate, with 16-bit resolution; the 48 kHz rate was intended to prevent direct digitalto-digital recording from CDs. However, these tapes can themselves reduplicated directly, or “cloned,” without

further degradation or noise.1

Prerecorded DAT tapes and CDs usually have digital “copy-protect” flags– not part of the music itself –designed to be read by consumer-model digital recorders. These flags are intended to inhibit digital-to-digital copying, but to do so the hardware must be capable of reading and using the flags. Current DAT hardware is not,

according to the RIAA.2

For computer data storage, DAT provides a high-capacity alternative to CD-ROM. A standard R-DAT cassette can store two encyclopedias’ worth of data, the equivalent of 65 12-inch tape reels or 8 of the conventional

“streaming tape drive” cartridges used for backup storage. One market niche for DAT storage is thought to be as

backup for high-capacity, hard-disk personal computers and work stations, where floppy diskettes are impractical.

DAT tapes are about half the size of a conventional analog audio cassette and come in a sealed “box” similar

to a videotape. The DAT recorder differs from an analog recorder in that (like the VCR) the record/play head

rotates. Digital recording gives a high dynamic range (96 db) and audio frequency response similar to a CD (2-22

kHz).

Unlike the CD, DAT is a contact medium in which the tape must be wound and rewound repeatedly. Eventually, DAT tapes will degrade, and the use of DAT as an archival medium is in question by some, including the

National Academy of Recording Arts and Sciences (NARAS). One of the market questions for DAT is whether

consumers would accept a relatively expensive contact-playback medium, if they had no way to make backup

copies of the tapes, when less-expensive CD players are already available for less than $200.

Many consider the RIAA’s threat to sue the first manufacturer to sell consumer-model DATs in the United

States largely responsible for delaying widespread introduction of DAT here. For example, the first consumer

DAT recorders models had been expected in the United States in 1987. Car DAT players without recording capability have been available for $1,500 and up since mid-1988; prerecorded software, mainly classical and jazz, sells

for $25 and up. With no end to the RIAA dispute in sight, alternative channels of distribution for DAT recorders

opened up:

● The “gray market” for unofficial imports, selling for $1,600-$3)000. By early 1989, importers began planning

for large imports of gray-market DAT recorders, despite the RIAA’s threats to sue anyone importing the

machines. One New Jersey importer expected to import 5,00010,000 DAT recorders by mid-1989 and sell

them through audio stores; an affiliate sold about 600 DAT machines in 1988, primarily to recording studios

and Government agencies, including the Department of Defense.

. “Professional” models selling for $2,500-$7,000, which have been legally imported and sold since 1987. The

RIAA has not opposed DAT as a professional medium, despite the fact that, unlike consumer models, the pro

units can record at 44.1 kHz (the CD rate).

By contrast, mid-1987 forecasts for DAT expected that the recorders would initially sell for about $1,500, but

that the price would drop to around $250 in a few years as sales volume increased (earlier projections had expected consumer models to sell for $950-$1,250 in 1987). Conservative estimates of 1987 sales were in the

20,000-50,000 range, with reported forecasts of 220)000 DAT sales in the U.S. for 1988 and a cumulative total of

1.1 million units by 1990. Cassette prices were expected to be $9 for 60 minutes and $12 for 120 minutes.

‘Under the proposed serial copy management system (SCMS) standard, new consumer-model DAT recorders would operate with a 44.1 kHz sampling rate, the same as the CD standard. However, copies of copies could not be “cloned.”

Zunder the SCMS standard, DAT recorders would recognize the flags.

Continued on next page

20-900 - 89 - 2
sumer-model machines were unsatisfactory in terms of machine-to-machine playback compatibility, recording

quality, and sound storage. The Institute concluded that significant changes in the DAT format, such as increasing tape width and the size of the recording tracks, would be necessary to make DAT satisfactory for professional

use.

In the meanwhile, a West German firm introduced the first DAT computer drive in March 1988; by the end

of 1989 perhaps a dozen U.S. and foreign firms are expected to introduce DAT computer products. The DAT

storage drives can hold about 1.2 billion characters of information, and search the data much faster than conventional tape-cartridge drives.

SOURCES: Steve Birchall, “Digital Audio Tape Issues and Answers, ’’Stereo ReviewMagazine, March 1987, pp. 56-59. Mark

Brownstein, “Gigatrend Data DAT Drive Features QIC Interface,” Infoworld, Aug. 14, 1989, p. 25. Patrick Cole,

“The Dash for DAT Dominance, ” Business Week, May 15, 1989, pp. 138H-138J. Michael Greene, “Permanence of

New Disk Formats Should Cue Formation of a National Music Archive)” Variety Daily, Oct. 25, 1988. Wayne

Greene, “The THOR Thpot, ” CD Review, February 1989, pp. 88-86. John W. Merline, “What’s All This about

DAT?” Consumers’ Research, June 1987, pp. 35-37. Edward Murray, “DAT’s a Snap,” Digital Audio, December

1988, p. 118. Mary Ann O’Connor, “DAT: The Controversy Continues, ” Optical Information Systems Update,

Aug. 1} 1987, pp. 4-6. Andrew Pollack, “New Storage Function for Digital Audio Tape,” The New York Times, May

25, 1988, p. D6. Martin Porter, “DAT’s NOT Ail, Folks!,” GQ, September 1988, pp. 317-326. “Board Turns Digital Audio Tape into Backup Storage,” Electronics, February 1988, p. 26. “The Gray Market Is Open for Digital

Audio Tape,” Electronics, February 1989, p. 60. TV Digest, vol. 29, No. 16, Apr. 17, 1989, p. 14.

them to the consumer market.17 Nevertheless, the International Federation of

the Phonographic Industry (IFPI) hasreportedly branded the planned launch

as “deplorable,” and stated that, “introducing the CD-R without putting copyright safeguards into place will undo any

progress made on the anti-piracy and

home-taping front during the last 3

years. ”18

[The signatories to the MOU have agreed

to meet to discuss copyright issues related to recordable/erasable CDs.]

Moreover, as niche boundaries erode, these

effects can spill over from one industry to another:

. DAT cassettes can store much more

computer data than regular computertape cartridges. (See box 2-C.) Some industry analysts expect DAT storage devices to account for about one-seventh of

the computer tape-drive industry by

1993. Unit manufacturing costs for the

DAT cassettes depend on the volume being produced, but because DAT is not yet

a mass consumer-audio product, large

scale economies are not yet being enjoyed. Because of the delays in introducing DAT as a consumer-audio format,

some DAT tape-drive manufacturers are

adopting a different DAT format intended primarily for computer data storage, and prices for data-storage DATs

may be higher than if there were a common format.19 Manufacturers have be-

‘7”CD Recorder Shipments Scheduled Next Month,” TV Digest, vol. 28, No. 46, Nov. 14, 1988, p. 10; “CD-R Coming to U.S.?” TV

Digest, vol. 28, No. 50, Dec. 12, 1988, p. 17. The blank discs would cost about $8.50 each.

‘ aPippa Collins, “IFPI Decries Launch of Japanese Recordable CD,” Billboard, vol. 101, No. 1, Jan. 7, 1989.

Igpatrick C{)]e, “The Dash for DAT Dominance, ” Business Week, May Is, 1989, pp. 138H- 183J.
compared to the 8millimeter DAT cas

settes for audio recorders.20

Continued uncertainty might even hinder the

ability of copyright industries to adapt to new

technical and market environments, if proprietors continue to seek and/or do obtain

remedies based on their current ways of doing

business. If legal uncertainties were reduced –by sanctioning, licensing, or prohibiting home copying— then businesses and consumers might better adjust to the new

technical and legal environments.

Second, if technological means for restricting private copying of copyrighted works are

implemented by the software and/or hardware producers, one result could be the virtual elimination of home copying, as well as

some other types of copying now specifically

permitted under the doctrine of fair use.21 If

this were to occur, it would be a de facto revision of the 1976 copyright law, but by industry

and not Congress.22 Technological uses would

establish law, rather than follow it.23 For some

types of technological copy protection, implemented through voluntary intra- and inter-industry agreements, government approval or

consent might be sought, to avoid antitrust

problems. Antitrust reviews might not, however, be the best vehicles for setting copyright

policy.

Although audio compact discs, the first

digital format for home-entertainment products, were introduced only a few years ago,

digital representations of music, images, and

other information have become central to the

future of home entertainment/information

products and services (see boxes 2-D and 2-E

for more information about compact discs).

New technologies continue to facilitate copying, manipulating, and transmitting digital

information at declining costs. As the costs of

these new technologies decrease, they are becoming available for home use, and thus may

increase the scope, quantity, and quality of

home copying.24

Some important differences between digital

formats and analog formats for information

storage, recording, playback, and transmission

●

are:

The resolution and signal-to-noise ratio

are greater for digital than for analog recordings. For audio recordings, this gives

a larger dynamic range, absence of

“background hiss,” and more brilliant

sound quality. Digital filtering and errorcorrection techniques can be used during

playback to “fill in” missing bits (somewhat equivalent to eliminating the effects of scratches and dust when playing

mDa~d J. BuerWr, “Emer~d DAT Mckup Device Can Store 2.2 Gigabyte,” Infoworld, Aug. 21, 1989, P 13; md Mmk Brownsteint

“Gigatrend Data DAT Drive Features QIC Interface,” Infoworld, Aug. 14, 1989, p. 25.

zl~me t=hno]o@c~ mems might reWire trmmction-hsed payments for home copying, this w~uld be the technological eWiValent of a fee-based compulsory license.

22See footnote 8.

Z30TA is ~atefu] t. Da~d Mou]ton for his comments in this rewd. (D. Mou]ton, Berklee Co}]ege of Music, letter to OTA, Aug. 5,

1988. )

24This str~ns the tradition~ Conmpt ofcopWight as a private right, private]y enforced, which was est.ab]ished when home copying

techniques were relatively inferior to those used for commercial publication. Now, “publishing” can bea private act. For an extensive

examination of the implications of technological change for copyright enforcement, see OTA-CIT-302, op. cit., footnote 1, especially

ch. 4.
The audio compact disc (CD), introduced in Japan

in 1982 and in the U.S. and Europe in 1983, offers improvements over some of the shortcomings of

longplay vinyl discs (LP records). While LP records

can produce very high quality sound, they are subject

to problems such as disc wear and damage, background noise, and “wow and flutter.” These problems arise largely because the LP depends on a mechanical scanning system. The player’s needle-stylus must be in direct contact with the grooves in the

LP, where the analog sound is encoded. Dust, surface damage, warping, and variations in rotational

speed will affect the quality of playback sound.

The CD technology uses a different approach. The

digital information recorded on the surface of a CD

represents sampling of an audio signal at the rate of

44.1 kHz. The CD player reads this digital information with a laser-optical scanning system that requires no physical contact. Further, the player’s digital signal processing system is independent of the rotational speed of the disc. The result is very nearly

perfect reproduction of sound that will not degrade

even after repeated plays.

Information is recorded on a CD as a succession of

tiny pits, each one 0.12 micron deep and 0.6 micron

wide. Length of the pits varies from 0.9 to 3.3 micron.

[Note: one micron = 0.000039 in.) A standard 5-inch

CD, on which 60 minutes of music is recorded, would

have about 3 billion pits. Each series of pits and

“lands” (spaces between pits), represents a series of

digital bits. The encoded information includes not

only the “channel bits” that represent the audio information, but also the “subcodes” that govern the

control and display functions of the player and the

tracking signal that allows the player to follow and

read the pit pattern.

The playback system for a CD is shown in the illustration below. Light beams from the semi-conductor

laser (780 nanometer wavelength – in the infrared range), are made parallel by the collimator lens

and then focused by the objective lens into a 1 micron spot that scans the disc. Light reflected from

the reflective layer on top of the disc returns through

both lenses to the beam splitter prism, which diverts

it onto the photo detector. The photo detector can

distinguish between light reflected from a land and

light reflected from a pit. Light from the latter is

slightly dimmer because the pit is approximately 1/4

wavelength closer to the lens, and thus it generates

destructive interference.

The signals derived from the photo detector then

go into a signal processing system that detects and

corrects errors in the bit stream.

The CD-System

Protective coating Reflective layer

SOURCES: N. van Slageren, “Basics on Compact Disc: A Short Introduction,” Nederlanse Philips Bedrijeven B. V., Electro

Acoustics Division, Optical Disc Mastering, Eindoven, The Netherlands, various pagings, n.d.

For a brief history of the CD see Fred Guterl, “Compact Disc,” in “Technology ‘88,” IEEE Spectrum, January 1988,

pp. 102-108.
The production of compact discs (CDs) differs in a number of respects from the manufacture of long-play

vinyl discs (LP records). There are two sizes of audio CDs in current use: the 5-inch CD, which can contain about

60 minutes of recorded music, and the 3-inch “single,” which holds 2 or 3 songs. The steps for making them are

outlined in the illustration below.

Program production – recording, mixing and creating a “master tape” of audio material — is essentially the

same as for LP records. The master tape, containing two stereo audio channels, maybe in either digital or analog

format.

In the tape mastering process, the master tape is converted from analog to digital or from digital to another

digital format. Subcodes (indexes and other information needed for control and display functions of the CD

player) are also added to the bit stream. The result, a digital “tape master” is used to produce the “disc master. ”

Many of the following steps must be performed under “clean-room” conditions, because of the high level of

precision required. In the disc mastering process, the information from the tape master is recorded optically (that

is, using a laser) onto the surface of a glass disc which has been coated with photoresist. This surface is then

developed, much as a photograph would be, producing the “disc master.” In matrixing, the surface of the disc

master is transferred to a nickel shell (“father”). The father is a negative from which a number of positive “mothers” are made. From the mothers, “sons” or “stampers” are produced. After suitable processing, these stampers

are used for replication. The pattern on the surface of the stamper is used to make a pattern of pits on the surface

of a transparent polycarbonate plastic disc. The plastic disc is then sprayed with a reflective aluminum coating,

and a layer of protective lacquer. Finally, the center hole is punched out and the label is printed onto the protective layer.

SOURCES: Material in this section is based on information from: N. van Slageren, “Basics on Compact Disc: A Short Introduction,” Nederlanse Philips Bedrijeven B. V., Electro Acoustics Division, Optical Disc Mastering, Eindoven,

The Netherlands, various pagings, n.d.

an LP record). Some playback methods ● Multigenerational digital copies (of digifor digital recordings do not require tal recordings) can be made with no loss

physical contact (e.g., record/stylus or of quality or clarity – copies are “clontape/head), so those recordings will not able.” With analog audiotaping, for exsuffer ‘(normal wear and tear” from re- ample, the quality of successive generapeated play.
indistinguishable from “originals.”

Computer- and/or microprocessor-based

recording and playback equipment can

capture, store, copy, and manipulate

digital information (including music or

images) more rapidly and cheaply than

in the analog realm.

Digital representations of music, images,

and information “code” the content as a

bit stream of ones and zeros, which can

exist in electronic form, independent of

any tangible, physical object. The bit

stream representing an artistic work can

be transmitted in electronic form (with

no physical embodiment), or it can be

stored in a new physical medium, without altering the essential characteristics

of the work.25 A physical embodiment is

not essential for a digital work to be a

“freed” piece of intellectual property: the

work can be fixed in electronic form, and

can be distributed electronically, rather

than in a physical embodiment (see ch.

3).

In addition to DAT, some of the other digital (playback and/or recording) formats that

are available now, or are expected to be avail

EROSION OF NICHE

BOUNDARIES

Over the next decade, digital representations of creative works and other home entertainment will come to predominate. Consumers will grow increasingly accustomed to

high-quality digital formats, and the ability to

efficiently store, copy, transmit, and manipulate their contents (e.g., with digital video interactive, erasable/recordable digital media,

or audio and video computer peripherals). As

this happens, niche boundaries predicated on

content or format (e.g., “audio” v. “video,” or

“audiotape’) 

v. “computer media”) will break

down. These niche boundaries have already

begun to erode significantly: the optical-disc

formats of the 1980s–audio compact disc,

compact disc video, compact disc interactive,

and digital video interactive — have evolved

from read-only, content-specific carriers to

manipulable, audio/video/software operating

systems. Moreover, new digital media like

digital audiotape (DAT) and erasable/recordable compact disc (CD-E) will have multiple

applications in business and the home, for example, computer data storage, as well as

prerecorded images and music. Multipurpose

hardware (i.e., computer-based player/receivers) will come into use.27

25 For ~xamp]e, the ~i~~ repre=n~tion of a sound recording could be stripped from a cOm Wct disc, tr~smitted via modem to a

personal computer with a peripheral DAT, and then played. The information content in electronic form duringtransrnission would be

the same as in the disc and tape embodiments. Similarly, computer software or data can be transmitted from one computer to another; it is the same program irrespective of whether it is stored on a diskette.

26A ]onWr-term emp]e might be miniature “silicon recorders on a chip) “ available in perhaps 10 years or so. All the digital

circuits equivalent to those in a conventional CD player could be contained in a single chip, which would become a “player” without

moving parts. Another chip with several gigabits of memory would carry digital music (approximately 4 gigabits of ROM could carry

the contents of a conventional CD). IHeitaro Nak@ima (Sony Corp.), ~ot~ in ~Di&s4 VO1. Zgt NO 8! Feb. 20) lg~g, P. 12. )

27 For emmple, ~drew Lippmm (Associate Dir@or/MIT Media bb) has been quoted EM saying in the context of high–density

television, “forget TV sets. In 3 years there won’t be any. Instead, there will be computers tith high-~~ity display screens. Inside

these computers there will be digital instructions allowing them to receive ABC, NBC, HBO, and anything we can dream up. ” (27

Digest, vol. 29, No. 6, Feb. 6, 1989, p. 13. )
p, , g, ,

and other information on a compact disc. The following section describes some of these now in use to encode

audio, video, and computer material on optical discs. Until now, discs for home use have been for play only: information was recorded at the factory by a complex mastering procedure that could not be changed by the consumer. However, recordable and erasable/recordable CDs for home use are under development.

Compact Disc Video: Compact disc video (CD-V) is a laser disc format carrying digital video, as well as

digital audio, tracks. A precursor, the analog laser disc, was first introduced in 1979, but its popularity was limited

(in part, by the introduction of videocassette recorders).

CD-V discs come in 5-inch, 8-inch, and 12-inch sizes. The 5-inch CD-V “single” (the same size as a conventional audio CD) holds 5 minutes of analog video (e.g., a music video) with a digital soundtrack on the outer portion, plus about 20 minutes of additional CD-audio material. The current 8-inch version, called the CD-V EP,

holds about 40 minutes of analog video and analog and digital sound (e.g., short films, cartoons, educational

shorts), and the 12-inch, or CD-V LP, version holds up to 120 minutes of analog video with digital and analog

sound (e.g., movies). Existing video disc players will play the larger versions; older ones play analog sound only

and newer ones play digital sound. A different player is required for the single because the scanning sped is

different. Combination, or “combi” players will play all three sizes, plus audio CDs; there also are dedicated players for the 5-inch CD-V singles and 5-inch audio CDs.

Compact Disc Interactive: The compact disc-interactive forrnat, or CD-I, was first announced in 1986. It

is a specification for video, audio, software interfaces, and data on one 5-inch disc. The CD-I player (in reality, a

personal computer with a special interface and TV monitor) will display still pictures, animation, or full motion

video. CD-I also offers varying levels of audio quality for music and speech; the highest-quality music is comparable to that on an audio CD. Playing time depends on the combination of audio, video, and data on thedisc, as well

as sound quality. One disc will hold about 74 minutes of digital audio sound, or 288 minutes of analog “mid-fi”

stereo, or 19 hours of speech-grade monaural sound. Video and data storage greatly shortens playing time.

Digital Video Interactive: Digital video interactive (DVI) offers about an hour of digital full-screen, fullmotion video, or else various combinations of full-motion video, still images, graphics, programming, digital

sound and text. A frame of video television takes up 600,000 bytes, so conventional full-motion video at 30

frames/second corresponds to a data rate of 18 megabytes/second. A CD holding 648 megabytes of data could

contain only about half a minute’s worth of full-motion video. DVI uses computer data-compaction technology to

compress digital video data, thus increasing the amount of information that can be recorded.

For recording, DVI uses a computer and proprietary data compression technique to analyze the video frameby-frame. Only the relatively small portion of a frame that differs from the preceding one–the part actually

conveying motion — is stored. For playback, the DVI microprocessor takes data off the CD-ROM in real time and

“decompresses” it to recreate a high quality, moving image. This microprocessor can allowtheviewer to manipulate or modify the picture on the screen (e.g., rotate it, freeze a frame, zoom in, invert it).

At the end of 1988, beta tests of various DVI applications were being conducted; these include commercial

adult and children’s educational/training systems, government training systems, home information and shopping services, travel agency information, furniture point-of-sale and interior design tools, imaging and 3-D modeling systems, marketing research systems, and museum exhibits. In March 1989, a major computer manufacturer announced that it would endorse the DVI standard. Add-on modules are expected to be available by early

1990 that will allow DVI to be played on some personal computers.

Recordable/Erasable Compact Disc: As the controversy concerning large-scale introduction of consumer DATs continues, a new set of home recording technologies is emerging recordable and recordable/erasable compact discs.

The newest of these-the thermo-optical recordable/erasable compact disc, called THOR (Tandy High-Intensity Optical Recording) –was announced by the Tandy Corp. in April 1988. Different versions of play-eraserecord CD systems had previously been announced (e.g., by Sanyo and Thomson SA), and others are reportedly

under development in the United States and Japan. THOR technology is said to be compatible with current CD

audio technology, so that the discs could be played in a conventional CD player (and vice versa).

Continued on next page
g p, g, g 

recording laser to heat a thermally sensitive dye polymer material in the disc. Heating the dye changes its optical

properties and creates the equivalent of the “pits” in a conventional audio CD. These pits are environmentally

stable, enclosed in a protective layer to minimize the possibility of damage. To erase the disc, the same laser

reverses the thermo-optical process, smoothing one or all of the pits. Tandy plans to make consumer-audio

THOR recorders available in 1990, and also plans to introduce THOR computer data storage devices in 1991.

In 1987, Philips and Sony had announced plans for a CD mite-once player (producing discs that could not be

erased and reused), aimed at professional markets for computer data storage or sound recording. The write-once

technology is called CD-R; according to Philips, blank CD-R discs will be gold.

SOURCES: Robert P. Freese, “Optical Disks Become Erasable,” IEEE Spectrum, February 1988, pp. 41-45. John Gosch,

“From Thomson, a CD Player that Erases and Records, ’’Electronics, Mar. 17, 1988, pp. 42-46. Ronald K Jurgen,

“Consumer Electronics, ” in “Technology ‘88,” IEEE Spectrum, January 1988, pp. 56-57. Peter H. Lewis, “Bringing Realism to the Screen, ” The New York Times, Nov. 27, 1988, p. F9). John W. Lyons, National Engineering

Laboratory, National Institute of Standards and Technology, letter to J. Winston, OTA Apr. 17, 1989. Ken

Pohlmann, “DAT Hears Footsteps,” Digital Audio, August 1988, pp. 16-17. Harry Somerfield, “CD Recorder

Could Make Tape Obsolete,” St. Petersburg Times, May 29, 1988, p. 3F. “Are Multimedia PCs around the Corner?”, Electronics, May 1989, pp. 42-43. “Philips and Sony Design CDs That Can Record, ” Telecom Highlights

International, Nov. 11, 1987, p. 18. TV Digest, vol. 28, No. 51, Dec. 19, 1988, p. 16. “Digital Video Interactive Technology, ” (promotional materials) Intel Corp., 1988. Intel acquired the DVI Technology Venture from GE in 1988.

DVI was originally developed at the David Sarnoff Research Laboratory (formerly RCA Laboratories). Tandy

Corp. product literature, 1988. Tandy has not yet released the details of how THOR works.

Since enactment of the 1976 copyright law, So far, it has not been extremely difficult to

questions about home uses and home copy- classify blank media by prospective content/

ing — specifically, the congressional and judicial debates over home videocassette recorders (VCRs)28 and the recent congressional

debates over home audiotaping– have continued to be addressed on a niche-by-niche basis.

The current law (Title 17, U. S. C.) contains

special provisions pertaining to “sound recordings,“ “computer programs,” and “motion pictures.” The home audio- and videotaping debates of recent Congresses have

included arguments for and against a tax or

royalty on the media used to make copies — i.e., on “audio-” or “videotapes.” Distinctions among these niches are blurring, however, and may well disappear.

use: audio recorders, video recorders, and

computers have used different, physically recognizable blank media. In addition, recording/playback equipment is generally recognizable by intended use: different equipment is

generally used to record audio, video, etc.29

In the not-so-distant future, however, the

same recorder and/or blank medium might be

used for sound, images, or computer data.

Therefore, durable “compulsory-license-withfee” provisions (like a “tape tax” or “homecopying royalty”) might be complicated by

the inability to classify all the prospective uses

of omni-purpose media and/or recorders. For

example, a provision pertaining to “devices

zavideo~ping issues were not putt. rest by the 1984 Supreme Court decision in Sony COV. V. Univemal Cio Stidios, Inc. See ch. 3.

where are exceptions: for example, pulse code modulation (PCM) adapters can be connected to a stereo system, digital radio receiver, or other audio source, to record audio on videotapes with a VCR. See: Bob Hodas, “Digital Recording Comes Home, ” Digitai

Audio, July 1988, pp. 22-23, and Jeffrey A. Tannenbaum, “Adapters Allow Digital Taping Using VCRs,” The Wall Street Journal, May

20, 1987.
disk; a blank digital audiotape could be used

to record music or to store computer data.

DIRECT ELECTRONIC

DELIVERY

New infrastructures and business arrangements facilitating new methods of distribution for audio, video, and other entertainment

and information products are being developed. The new infrastructures include transaction-based systems to deliver audio and

video materials on demand (via optical fiber

cable or satellite) and the prospect of highercapacity communications channels to the

home. Also, software producers, publishers,

and providers are consolidating into totally

integrated entities that manage functions

from the creation of new artistic works to

their final distribution. These developments

could eventually make direct electronic delivery of audio, video, and other entertainment

products to consumers feasible. As Canadian

record producers noted in their 1987 study of

home taping: “The development of centralized storage computers, satellite and/or interactive cables presages new methods of distribution of intellectual property.”30

These new modes of delivery challenge or

call into question some of the conventional

concepts of copyright. In part for this reason,

they may be slow to develop. In the meanwhile, representatives of the recording industry maintain that it would not be justifiable to

delay or forego addressing copyright and

home audiotaping, just because the music in

nology to undercut the financial health of the

music industry based on assumptions and

predictions that may never bear out.”31

Regarding the development of electronic

delivery, some copyright proprietors consider

that technology is less important than the

current copyright law. In particular, the recording industry considers that direct electronic delivery of sound recordings would require a (new) performance right for record

companies. If the performance right were not

granted, RIAA maintains, electronic delivery

to consumers would not be economically viable, because other entities, such as cable

companies, could offer the same services without the permission of, or compensation to, record companies.32

These are arguable conclusions. There is

some ambiguity in the current copyright law,

and it maybe that clarification might be sufficient to encompass copyright protection for

direct electronic delivery to consumers. For

example, it is not clear that a one-to-one,

preordered and/or prepaid retail transfer of a

copyrighted sound recording in electronic

form constitutes a “performance,” as opposed

to a “delivery.” Sections 106 and 114 of the

current law affirm the control of copyright

owners in sound recordings over “delivery” of

copies in the form of “phonorecords”; it is the

Section 101 definition of phonorecords as

‘(material objects” that is troublesome. It

might be possible to extend the scope of Section 106 to include electronic delivery, without extending record companies’ rights over

(electronic) performances of the works.

301~A Study of Home Taping, ” Canadian Independent Record Producers Association (CIRPA), 1987, p. 51,

31H. ~wn, ~]etter t. J. Winston, OTA, May z, 1989. Enc]osure with comments on draft ch. 9, p. 3.

3ZOTA s~ inteMew with RIAA executive, Mm. 8, 1989.
boa de pucasegt (pcpe, at

least) be considered no more of a “public performance” than would be a delivery of physical material by mail. Rather, an electronic delivery could be considered an instance of

distributing copies of the copyrighted work to

the public for sale, under section 106(3), albeit

in an unconventional manner.

Representatives of the recording industry,

however, consider that, in practice, the distinctions between “performance” and “delivery” are seriously undermined by consumers’

ability to make home copies of music distributed by cable or satellite services. They argue

that the preceding discussion fails to capture

the basic copyright problem in this area, because it ignores the widespread practice of

home copying. Although customers who subscribe to cable and other music services are

not licensed33 to copy the music being performed, RIAA argues that they will make copies. Thus, the end result, especially for digital

formats, will be indistinguishable from an

electronically delivered “original” — except

that the recording company would receive no

compensation. According to RIAA, cable companies and other entities perform the recording industry’s product without compensation

to the industry and, in fact, “sell” that product

in competition with the recording industry by

RIAA considers that record sales are further

displaced. Therefore, RIAA considers that the

lack of a performance right makes existing

rights over distribution unenforceable.34

Thus, it appears that the otherwise separate

issues of home copying and performance

rights can be linked by home copying practices. But creating a new performance right

(and royalty) would be a more indirect means

for addressing home-copying issues than

other possible actions like a home-copying

royalty or technological copy-protection.

Recent business decisions by some copyright proprietors may have placed them in a

better position to move towards direct delivery. Motion picture studios are entering the

home video rental and cable markets. Recording companies, most of which have musicpublishing subsidiaries, are acquiring independent music publishers; their musicpublishing activities earn revenues from

licensing and synchronization royalties for

soundtracks, commercials, etc., as well as

from performance royalties for broadcasts

and public performances.35 The net effect is a

trend towards very large, consolidated firms

that can produce new works and distribute

them through a number of channels. For example, the Time-Warner merger could unite

ss~i]e a Cab]e Comwy or other c~rier may “distribute” performances ekctronical]y (by playing sound recordings for a mass

audience), it does not have the right to sell buyers a license to make copies. For direct electronic delivery, the seller would need the

right to license the buyer to make at least one copy of the material. The right to sell copies (or to contract with someone else, e.g., a

manufacturer, to make copies for sale) is a right that section 106(3) grants exclusively to the copyright owner.

34H. ~=n, IUAA, ]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drti ch. 9, pp. 2–3.

sSFor exmple, in eu]y 1989 Thorn–EMI (which owns Capitol and EMI Records) announced Pl~s to buy SBK Entertainment World,

with its catalog of 250,000 songs, including copyrights formerly held by CBS Songs and MGM-United Artists. In 1987, Warner Communications Inc. (which owns Warner Records) bought the then-largest music publisher, Chappell-Intermng Music, Inc., with its

catalog of 400,000 songs; Warner/Chappell now has a catalog of some 750,000 songs. (Jon Pareles, “Thorn-EMI Gets SBK for $337

Million,” The New Yorh Times, Jan. 6, 1989, p. D14.)

The acquisition of Chappell-Intersong Music, Inc. by Warner Communications produced the world’s lmgest music publisher,

Warner/Chappell; SBK-EMI is its closest rival. Warner/Chappell reportedly plans to grow by acquiring foreign music publishers, as

well as smaller domestic catalogs. (Jean Rosenbluth, “Warner/Chappell Head Looks to Overseas Expansion, ” Variety, n.d., 1989, p.

123. )
Boxes 2-G and 2-H spotlight some of the

new services and systems being developed to

bring entertainment and information to the

home.37

TECHNOLOGICAL COPY

PROTECTION

Proponents of technological means for copy

protection note that much of the legal tradition of copy-right was developed under the assumption that there was no technical “solution” to prevent private copying, and that

enforcement of laws against private copying

would be virtually impossible.38 Therefore,

the “solutions” historically sought by rights

holders were private-copying royalties,39 as

opposed to unenforceable bans on private

copying. New techniques that would prevent,

or raise substantial barriers to, private copying are being developed. While these may be

technically feasible, important – and possibly

overriding– issues remain as to their political

feasibility and social desirability. In considering proposals for technological means for

copy protection, technical advances should be

regarded as necessary servants of policy,

rather than as sufficient reasons for setting

policy.

the copyright issues posed by DAT:

Technological approaches to preventing

copying vary in effectiveness, and can be

undermined or defeated by new techniques. The extent to which consumers

do seek to circumvent a particular technique will depend in part on the time and

cost required to do so, as well as the perceived acceptability of the copy protection.

Technological approaches may require a

greater role for government than more

traditional ones like royalties. For example, insofar as the technologies are susceptible to bypass or deactivation, the

Government might wish to make such

modifications illegal. Then, to enforce

this prohibition, either government or

private parties would have to conduct

some form of search, inspection, or surveillance. In addition, if such laws controlled imports, this enforcement would

also need to be taken into account.

Technological approaches may amplify

the intermingling of international intellectual property and trade issues. As the

1986 OTA report on intellectual property noted, attempts to resolve intellectual property problems are likely to be

more effective when undertaken as part

seF]oyd Norris, “Time Inc. ~d Winner to Merge, Creating brgest Media Company,” T~ New York ~’me% Mw. 5, 1~9) P. Al. In

addition to magazine and book publishing, Time Inc. ’s lines of business include cable television and cable programming (Home Box

OffIce). Warner Communications, Inc. )s lines of business include film, recorded music, cable television, and music publishing.

3TF’or a more thorough treatment of new telecommunication infrastructures and opportunities, .932 OTA-CIT-@7, op. cit., f~tnote

12.

%20mputersoftware isanarea where unilateral technical means forcopyprotection have longbeenavailable. Interestingly, most of

the major computer soflware producers have abandoned copy protection for applications scdlware packages, largely for marketing

reasons: protected programs caused technical problems for legitimate users and were targets for hackers who bypassed the protection with a “code breaker” or “copy buster”.

%3ee, for example, “A Technical Solution to Private Copying the Case of Digital Audio Tape,” Gillian Davies, European ZntelMua/

Property Review (Opinion), vol. 6, 1987, pp. 155-158.
Technology is opening up new ways to deliver information and entertainment into the home. These new

delivery systems may eventually replace, or at least supplement, sales of audio recordings, videocassettes, and

preprogrammed computer discs. If information is delivered to the home in electronic form, people can use currently available technology to make their own temporary or permanent copies for future use.

Cable Systems: The Cable Communications Policy Act of 1984 (Public Law 98-549) prohibited telephone

companies from operating cable television systems in their own regions, but telephone companies currently may

own and operate cable systems outside their own regions or abroad. Fiber optic cable systems — whether provided by cable system operators, phone companies, or others — would offer enormous capacity, compared with

conventional copperware telephone lines or the coaxial cabling traditionally used for cable systems. They could,

for example, carry integrated services digital network (ISDN) voice telephone service simultaneously with highquality audio and video (including high-definition television), and high-speed data services to private homes.

Cost is a major barrier to installing the “last mile” of fiber to individual subscribers, and economic justifications

for installing fiber to homes are often based on projected service offerings like cable TV or video on demand.

Telephone companies and cable operators are examining fiber-to-the-home systems, and telecommunications

and cable-equipment firms are developing fiber-based trunk and distribution system products for cable operators.

Digital Music Services: Even without fiberoptic cable, it impossible to deliver CD-quality sound to homes.

A New York-based firm plans to introduce a cable radio service in 1989. The service will provide eight channels of

digital music over conventional cable TV lines, plus an optional ninth channel offering “pay-per-play” reception

of special concerts or album releases (for an additional fee). The firm is reportedly negotiating blanket licenses

with BMI and ASCAP and having discussions with recording company executives, who have traditionally been

unreceptive to pay-per-play home delivery systems. The service will offer digital audio in the CD-audio format,

using proprietary technology to compress up to nine channels of 16bit, 44.1 kHz full-bandwidth digital audio, plus

multiple data channels, to the regular 6 Mhz cable bandwidth. Cable companies would receive the encrypted

signal via satellite and distribute it to their subscribers over regular cable trunk and drop lines. A special tuner

(leased or purchased by the subscriber) would attach to the subscriber’s stereo tuner and to the cable like an

additional TV.

In January 1988, a California firm announced a planned music-only digital radio service offering 16 stereo

channels of CD-quality sound, plus graphics/teletext, to subscribers via coaxial, satellite, and/or UHF-TV transmission. The scrambled signal, carried in the 6 Mhz TV bandwidth, would be received via a special tuner that

would take the digital input and convert it to an analog output. The firm reportedly hopes to enter into agreements with recording companies for album distribution via a “pay-per-album” service. With this service, consumers (with addressable receivers) would be able to buy CD-quality music at lower cost. (They would order it by

credit card via toll-free numbers and record it at home on DAT or conventional tape recorders. ) Recording companies would receive a negotiated, “pure profit” licensing fee without having to bear manufacturing or distribution costs. Other than this special service, the firm plans to operate as a conventional radio station: playing singles and “announcing” the album and artist via a text generator display on the TV screen. As of early 1989, the

firm was testing the service with a small subscriber base, and hoped to be “on the air” by late 1989. According to

the firm’s president, some of the smaller recording companies, without distribution arms of their own, had expressed interest in the pay-per-album concept, but as of February 1989 no agreements had been reached.

SOURCES: Lawrence Curran, “Two Firms Link Arms to Run the Last Mile,” Electronics, February 1989, p. 95.

Fred Dawson, “GI Makes Major Moves into Fiber,” Cablevision, Sept. 12, 1988, p. 12.

Steven Dupler, “N.Y. Cable Firm Sets 8-Channel Digital Service,” Billboard, Feb. 4, 1989, p. 1.

Gary Slutsker, “Good-Bye Cable TV, Hello Fiber Optics, “ Forbes, Sept. 19, 1988, pp. 174-179.

“Telcos Fight Back: Phone Companies Gear up for Battle to Get into Video Delivery,“ Broadcasting, Sept. 9,

1988, pp. 47-48.

“Cerritos: A Testing Ground for the Future,” Telephony, Jan. 2, 1989, p. 1314.

TV Digest, Dec. 5, 1988, vol. 28, No. 49, p. 8.

Digital Radio Laboratories, Inc., Lomita, CA (promotional literature, 1988), and Doug Talley (Digital Radio

Laboratories), telephone conversation with OTA staff, Feb. 10, 1989.

International Cablecasting Technologies, Inc. product literature and OTA staff discussions with T. Oliver and

M. Seagrave (International Cablecasting Technologies), July 14, 1988.
y y g ppg 

tape. Rentals, pay-per-view, and telephone or cable jukeboxes represent additional ways to deliver entertainment to the home.

Video Rentals: Consumer spending on home video rentals has grown rapidly with the use of VCRs, going

from just $350 million in 1981 to about $5.5 billion in 1988. According to projections by Paul Kagan Associates,

the video rental business will be a $7 billion per year industry by 1990, even though VCR penetration seems to be

leveling off. The trend is toward large video “superstores,” each carrying 7,000 to 12,000 titles.

Videotape rental stores or chains originally operated by purchasing videotapes directly from the distributor.

Because of growing needs for investment in inventory to compete, there is now some movement towards transaction-based rental arrangements where the rental store leases new releases from the distributor with a per-rental

fee arrangement. This pay-per-transaction (PPT) arrangement reduces the inventory investment from the

rental store and allows the distributor to share in the rental proceeds.

With the move towards PPT operations comes the development of computer-based support systems. In

principle, these systems could be adapted to track electronic, rather than physical, transactions; computers and

data storage facilities would replace the physical inventories of prerecorded videotapes.

Cable and Satellite PPV: In part to counter increased competition from video rentals, pay cable and satellite dish program providers are initiating transaction-based, pay-per-view (PPV) offerings. Although by early

1989 perhaps only 25 percent of cable households had the addressable cable converters required for PPV transactions, some industry experts expect that the remainder will have them by 1991, making the PPV business worth a

projected $2 billion per year by 1996, compared with $60 million in 1987. PPV typically works by offering subscribers special events or movies not yet available on regular pay cable services. Proponents note that PPV offers

more convenience than video rental, but others think that its real appeal is to movie buffs who want to see films at

home before they are released on cassettes or pay cable.

While PPV accounted for less than 2 percent of the $13-billion per year cable industry, PPV offerings can be

extremely profitable for individual program rights holders. For example, although only 600,000 households ordered the Tyson-Spinks boxing match (at $35 apiece), the fight produced greater revenues for promoters and

rights holders than the 1988 Super Bowl. Movie studios earn an average of $250,000 for each film shown on PPV;

their PPV earnings were $36 million in 1988 and are expected to reach $1 billion by 1997. Because of PPV’s

potential profitability, services that collectively transmit movies to cable operators for PPV have been established by a group of movie studios, a group of multiple-system cable operators, and a large cable programmer.

The collective PPV services are transmitted by satellite to cable operators, who deliver them to homes equipped

with addressable converters. Most of these require a phone call; to make PPV more user-friendly, some converters (in 8 percent of PPV homes) have “impulse technology,” which allows the customer to order via pushbuttons

on the converter unit.

Until recently, a major barrier to PPV was the lack of reliable technology for wiring homes and handling

transactions and billing on a broad enough scale. In 1986, for example, only 2.1 million homes were wired to

receive PPV. Now, the number of homes equipped to receive PPV services is approaching 10 million, and is

projected to top 40 million by 1996, according to Paul Kagan Associates.

In the long run, PPV is thought to be video rental’s closest competitor, especially in 5 to 10 years when addressable converters will be available to all households. One advantage of PPV is thought to be program diversity

via “niche-casting”: programs with narrow appeal can be profitably offered by PPV. For example, if only one

percent of 20 million customers pay $20 to receive an opera, it will bring in $4 million – presumably, enough to

produce and distribute it at a profit.

A service to offer satellite dish owners a variation of PPV is scheduled to begin in 1989, using a satellite to

deliver the top 10 videos and other made-for-PPV programming 24 hours a day. Customers would order the programs by dialing a toll-free number to “electronically rent” a video. Also, interactive PPV offerings are under

development; these w-ill allow viewers to select story options or play games, using a keypad.

Continued on next page
cords directly. The system uses a combination of voice recognition, compact disc players, and personal computers

on a local area network. The provider (a recording company) refers to the system as “the radio station at the end

of the phone. ” Calls are billed by British Telecom; the minimum is $0.50 for 3 minutes. In late 1987, the service

was averaging 1,000 calls a day.

In 1989, a Miami-bad cable network was deriving the bulk of its revenue from charging viewers to see a

music video on demand – more or less. In this service, a selection of up to 1,000 music Video titles scrolls along the

bottom of the TV screen; by dialing a local 976-number and punching in selected song codes, the viewer can order

a particular title. However, like a conventional jukebox, the Video jukebox selections play in the order received, so

there may be a 20-minute to several-hour wait. The charge is $2 for one video, $5 for three. The telephone company keeps a small portion and the service shares the balance with the cable operators. In early 1989, the video

jukebox service was on nine cable systems, as well as a few low-power VHF affiliates. While the scheme maybe

well suited for exploiting popular local niches (reggae in Miami, for example), and proponents hope that the technology will expand to local job and real estate classified, it faces problems finding enough cable systems with

spare channels.

SOURCES: Mark Albright, “On Fast Forward: Video Superstores Bust into Tampa Bay Market,” St. Petersburg Times, Mar.

20, 1988, p. I-l. (Article reports data from Paul Kagan Associates, Inc. )

Greg Clarkin, “Burnett and Virgin Vision Dare to be Different,” Video Business (New York, NY), Sept. 30, 1988,

pp. 38-40.

Rich Katz, “Pay-per-ViewMusic Videos: Will Viewers Ante up to Play Them?” Channels, January 1989, p. 16.

Francesca Lunzer, “New Developments (Movies by the Hour),” High Technology Business, November 1988, p. 8

Edmond M. Rosenthal, “Cable Operators Stage a Comeback for Pay-TV Services, ” Television/Rudio Age, Sept.

19, 1988, pp. 46-48.

Andrew L. Yarrow, “Pay-per-View Television Is Ready for Takeoff,” The New York Times, Nov. 14, 1988, p. D9.

(Article reports data from Paul Kagan Associates, Inc. )

“Computer Group Starts,” Video Business, Sept. 30, 1988, p. 10.

“PPT: Money Hasn’t Changed Everything after an Emotional VSDA,” Staff Report, Video Business, Sept. 16.

1988, pp. 18-19.

Telephone News, vol. 9, No. 15, Washington, DC, Apr. 11, 1988, pp. 2-3.

of a multilateral effort; unilateral imposition of trade restrictions might lead to

retaliatory restraints on trade or to deteriorating international relationships.

Also, there is a danger that if intellectual

property policy is established in the context of trade issues, it may be skewed

from its original goals.40

In comments on a draft of this report, the

‘greater role for government’ than a traditional approach such as royalties,” and that

“...the integrity of intellectual property protection is essential to U.S. competitiveness in

international commerce and we do not see

why technological approaches to defending

the integrity of copyright should be disparaged or rejected because they have some impacts on trade.”41

RIAA took exception to the latter two points, As another issue, to the extent that technonoting that “ ...it is incorrect to assume that a logical approaches may make it more difficult

technological approach would require a to make noninfringing or fair-use copies,

‘“’’ Copyright Issues Presented by Digital Audio Tape,” Testimony of Fred W. Weingarten and Linda Garcia, Office of Technology

Assessment, U.S. Congress, before a hearing of the Communications Subcommittee of the Senate Committee on Commerce, Science,

and Transportation, May 15, 1987.

● l H. ~=n,~]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drm ch. 9, PP. 4–5.
pg

be preserved and that exemptions (from technological copy protections) “should and could

be worked out.”42 In practice, however, specific exemption procedures and/or techniques

to circumvent technological copy protections,

or to administer exemptions from or reimbursements of copying royalties, might be so

complicated or cumbersome that some fair

use would be discouraged.

Audio Recordings

New technologies have made copy protection possible for digital and, perhaps, for analog sound recordings. Machine-readable identification of copyrighted works (i.e., an

electronic [circle-C] /[circle-P] marking) and

specific identification of works (e.g., title and

publisher) are now feasible.43 Several technological copy-protection techniques have been

developed or proposed to prevent or limit

copying of digital recordings. The best known

of these is the CBS Copycode system, designed

to prevent digital-to-analog-to-digital or analog-to-digital copying on DAT machines.44

Other techniques that have received some attention in the trade press are the “Unicopy”

system proposed by the RIAA (that reportedly

would allow one analog or digital copy of a CD

to be made),45 the “Solo-Copy” proposal by

Philips (that reportedly would allow consum

ppppy 

tions (that reportedly would prevent DAT

copying of copyrighted material on tapes or

CDS).46 None of these techniques can be implemented unilaterally by the recording companies; hardware modifications would also be

required. For now, recording companies

would need joint agreements with (mostly,

overseas) consumer-electronics firms to effect

technological copy protections.

Serial Copy Management System

A working group comprising representatives of Japanese and European hardware

manufacturers and United States and European software associations (e.g., RIAA and

IFPI) met in April, June, and July 1989 to discuss DAT and copyright issues. The working

group agenda focused on technological means

for preventing or limiting DAT copying of CDs

and other digital sources.47 In July 1989,

RIAA, IFPI, and hardware manufacturers

signed a MOU agreeing to seek legislation

mandating a new DAT format called Serial

Copy Management System (SCMS). SCMS

would permit direct, digital-to-digital copying

of digital recordings and broadcasts, but not

digital-to-digital copies of these copies.48 (For

details about the agreement and SCMS, see

box l-E.)

4ZI-I. ~=n, ~]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drm ch. 9, P. 2.

The RIAA comments did not detail specific exemption procedures.

430TA stfi inte~ews with u Engineering Committee, Dec. 6, 1988.

44The copyc~e system is desim~ t. prevent Copfingof ~ audio sign~ that enters the DAT as an Walog signal. The method is not

intended to stop, and does not prevent, direct digiti-to-digi~copying. (John W. Lyons, Nation~ Engineering ~boratov) Nation~

Institute of Standards and Technology, memorandum to OTA, Apr. 10, 1989, comments on drafl ch. 9.)

4gAs de~ribed in TV Digest, Feb. 2X 1988, VO]. 29, No. 8 p. 14.

4e~ D2&~t, vol. 28, No. 6, Feb. 8, 1988; TV Digest, vol. 29, No. 29, JUIY 17, 1989, P. 15.

A7TVDi&~t, Mm. 20, 1989, “o]. 29, No. 12, p. 16; Shig ~ji~, “~dw~e Firms, ~be]s C]oser to Accord on DAT,” Bi&md, Apr. 1,

1989, pp. 1,83.

4aThe ~~n ~rier t. dir~ di@~-to-digit~ DAT Copying of CDs-different ~pling rates — would be eliminated. DAT recorders

with SCMS would make only one additional generation of copies made from analog sources.
is passed. The RIAA has maintained the posi

tion that Federal legislation is essential to implementing any agreed-on technological solutions, because such agreements, absent

legislation, would raise serious antitrust concerns. 49 Also, the Electronic Industries Association (EIA) and RIAA note that legislation

would be needed to make the agreement binding on manufacturers not participating in the

working group.50

CBS Copycode System

In an earlier attempt to resolve the home

audiotaping controversy generated by the

prospect of DAT recorders coming into widespread home use, legislation was proposed in

198751 requiring that DAT recorders sold in

the United States befitted with a copy prevention decoder so that suitably “coded” material

could not be copied. The Copycode system, developed by CBS Records, was the basis for the

proposals:

The Copycode system “codes” audio recordings by removing a narrow band of frequencies from the audio signal; this is referred to as

“putting a notch” in the signal. The DAT recorder would contain a decoder to sense the

presence of the notch; when it was detected,

the recorder would be disabled, preventing

copying. The intent was to prevent copying,

without noticeably degrading the sound quality of the recorded audio signal. The analog

Copycode encoder had logic circuitry used to

determine whether to encode the audio signal, based on its signal levels near 3840 and

2175 Hz. This logic circuitry would switch the

encoding notch filter on and off, presumably

qy 

3840 Hz, which lies between the highest B-flat

and B on the standard piano keyboard. This

frequency range is well within the range of

normal hearing for young adults; musical instruments like pianos, synthesizers, piccolos,

and bells produce fundamental notes in the

encoding notch.52

Those opposing this legislation argued,

among other things, that the notching could

seriously degrade the recorded sound (compared with the unnotched version), that it

might produce false positives (i.e., refuse to

record unnotched materials), and that it

would be relatively easy to circumvent.

Copycode’s proponents strongly disagreed

with these arguments. To resolve this technical dispute, Congress requested that the National Bureau of Standards (NBS, now the National Institute of Standards and Technology)

study a specific implementation of the

Copycode system. NBS received two recorders

and encoders from CBS, along with proprietary descriptive material that was kept confidential. Part of the testing was done by a subcontractor specializing in psychoacoustic

measurements. Two stakeholder groups — the

RIAA and the Home Recording Rights Coalition (HRRC) – agreed to fund the NBS test.

NBS was asked to answer three questions:

1. Does the copy prevention system achieve

its purpose to prevent DAT machines

from recording?

NBS found that it did not achieve its

stated purpose. Although it prevented

copying notched material much of the

@H. ~=n, R.LAA, ]etter to OT& May 2, 1989. Enclosure with comments on drafl ch. 9, p. 5.

~~ Di&st, VO]. 29, NO. 31, pp. 10-12.

~lH.R. 1384 and S. 506

%ke U.S. Department of Commerce, National Bureau of Standards, National Engineering Laboratory, “Evaluation of a Copy Prevention Method for Digital Audio Tape Systems, ” NBSIR88-3725 (February 1988), ch. 2. The material in this section is based on the

NBS report.

20-900 - 89 - 3
2.

3.

false negatives (recorded notched mate

rial). NBS studied 502 tracks on 54 CDs,

and found false positives for 16 tracks on

10 discs.53

Does the system diminish the quality of

the prerecorded material?

NBS concluded that, for some listeners and some selections, the encoder

notching produced discernible differences between notched and unnotched

recordings. Although the effects were

fairly subtle for some selections, for others subjects could hear differences.54

Can the system be bypassed, and, if so,

how easily?

NBS found that the copy prevention

system could be bypassed easily; NBS

engineers designed and implemented

five different circuits to bypass the copy

prevention system. According to NBS,

these circuits were simple and would be

easy to construct for about $100 each.55

After the NBS test results were reported and

published, the Copycode legislation was withdrawn.

Generic Approaches to Preventing

Audio Copying56

After discussions with the RIAA Engineering Committee, the OTA staff requested more

information on technical approaches to copy

protection, and on ways to implement them.57

formation summarized below was provided in

April 1989 by the RIAA Engineering Committee. Neither the Engineering Committee nor

the RIAA intended the information outlined

below as an endorsement of any particular

system or approach.58

According to the RIAA Engineering Committee, copy-protection systems could be designed to prevent copying of prerecorded and/

or broadcast material, to limit copying, or to

allow copying with remuneration (see box

2-I). Copy-protection systems of these types

might be implemented in the analog domain,

the digital domain, or both.

For example, copyrighted materials might

be identified via an analog baseband signalling system. By identifying materials in the

analog domain, the copyright-identification

information in a digital recording could not be

suppressed by using analog channels in a recorder (see discussion of analog circumvention below). The copy-protection signal would

be contained within the spectrum of the recorded music (or background noise) and

would be inaudible. According to information

provided by the RIAA Engineering Committee, efforts are ongoing to develop a system of

this type.

Copyrighted materials could also be identified in the digital subcodes currently in (digital) recordings. If these markings were recognized by recorders, they could be used to

provide protection from direct digital-to-digital copying. But this type of copy protection

SsN~, Op. cit., footnote 52, P. 44-48.

54N~, op. cit., footnote 52! 49-W.

s~N~, Op. cit., footnote 52, P. 65-71.

56Mater1~ in thl~ ~ion ~umm~izes information profid~ by the ~ Engineering Committee. (H. Rosen,~,letter to J.

Winston, OT& Apr. 17, 1989 (enclosure); H. Rosen, IUAA, letter to J. Winston, OTA, Jun. 2, 1989 (enclosure). )

57J. Winston, OTA, letter to H. Rosen, u,~. 12, 1988.

S8H. ~Wn,~letter to J. Winston, OTA, Apr. 17, 1989 (enclosure).
Option 1: Prevent copying of original prerecorded and broadcast material (“original copying”).

To do this, the original copyrighted recording would be encoded with a digital flag or an analog baseband

signal. A detector in the recorder would sense the code indicating that the material was copyrighted and

would then disable the recording function.

Option 2: Limit Copying.

a.

b.

Limit the amount of original copying-This type of system would limit the number of copies of

prerecorded and broadcast material that could be made on anyone recorder. It could operate in the digital or analog domain. Each prerecorded source would have the catalog number and time code or track

number encoded in a digital subcode or baseband signal. When the prerecorded or broadcast source material is copied, the code would be entered into a nonvolatile, cyclical memory in the recorder. The recorder would only be able to record a particular selection once (until the recorder’s memory was filled and

reset, several thousands of copies later).

Prevent serial copying-This type of system would allow an unlimited number of copies to be made

from the original prerecorded material, but would not allow copies to be made from copies. In the digital

domain, copies of copyrighted materials would be marked with a digital flag. The recorder would recognize the flag (indicating that the material to be copied was itself a copy) and no additional copies of the

copy could be made. In the analog domain, this system could operate with a baseband signal indicating

that the work was copyrighted.

IOTA Note: The SCMS format corresponds to this option in the digital domain.]

Option 3: Allow unlimited copying with remuneration.

a. Debit card system– This type of system would allow unlimited copying but would use prepaid debit

cards to provide remuneration to copy-right holders for each copy made. It could operate in both the digital

and the analog domains. Recorders would be equipped with a debit card reader, and the original copyrighted recordings would be encoded with a digital identification code and analog baseband signal. To

copy a copyrighted work, the debit card would have to be inserted and left in the machine for the duration

of the recording; otherwise, the machine would fail to record. Noncopyrighted works could be copied without a card. The recorder’s card reader would deduct a fee from the debit card each time a track was recorded. When the card’s value was used up, the consumer would need to purchase a new card to make

more copies. Cards might be sold at record stores or other consumer outlets; revenues would be distributed to copyright holders, less a commission for the dealers. Cards could be disposable, but if the reader

could record information on the card itself (as on a D.C. Metro fare card) and if consumers were given

incentives to return the cards, they could be used to provide information about the material copied or the

hardware used.

b. Two-tiered blank tape levy– For this sort of system, blank digital audiotape would be classified into

two categories – one that could be used to copy copyrighted material (and would carry the levy) and one

that would not. For example, tape carrying the levy might be printed with white stripes on the nonmagnetic back. The recorder would have a simple diode light detector that would look at the tape back as it

passed around the DAT recorder’s helical scan drum. Prerecorded material would be encoded with a digital flag or baseband signal. Attempts to copy material with the copyright code would fail unless the recorder’s light detector indicated the proper output from the striped tape.

SOURCE: RIAA Engineering Committee, April 1989. Material provided for information only, to identify the range of technical alternatives to prevent or limit copying, and not as an endorsement of any particular system or approach.

could be circumvented by passing the mate- tion presents a technical problem in designing

rial through a digital-to-analog (D/A) con- copy protections for prerecorded and broadverter. Digital or analog copies of the con- cast digital sources. According to the RIAA

verted signal (without the digital subcodes) Engineering Committee, to limit this circumcould then be made. Such analog circumven- vention, one (legislative) alternative would be
digital-to-digital copying, or the use of a separate analog-to-digital (A/D) converter to COPY.

To prevent the latter, the purchase of such

A/D converters might be prohibited, except

for professional use. Alternatively, specialized

A/D converters that would generate a copyright flag could be mandated. Another option

would be require A/D converters or analog inputs on digital recorders to be designed so as

to reduce the quality (signal-to-noise ratio) of

the analog signal. This would penalize circumvention with copies of lesser quality.59 Another option, not yet technically feasible,

would be to identify copyrighted materials via

an analog baseband signal, as

above.

Video

The home video

Recordings

industry, with

described

sales and

.

rentals of prerecorded videotapes of- movies,

cartoons, sporting events, and the like, developed around the use of home videocassette recorders (VCRs). Ten years ago, the studios did

not foresee the benefits of home video for the

motion picture industry. Indeed, in their at

argued that the VCR would necessarily cause

the demise of the entire motion picture industry. As VCR use burgeoned, however, the studios set up home-video arms to produce and

distribute prerecorded videocassettes. By the

mid-1980s, movie industry revenues from

videocassette sales (often, sales to rental

stores) equaled their revenues from box office

receipts. 60 By 1988, the studios saw the profitability of rentals and observed that they did

not appear to cause a decline in box office receipts. 61 Subsequently, they began to diversify

into pay-per-transaction (PPT) video rentals

(see box 2-H).

At about the same time, the motion picture

industry began to consider establishing new

barriers to VCR recording of pay cable and

pay-per-view (PPV) programming, video rental’s major competitors.62 In a speech before

the 1989 Winter Consumer Electronics Show,

Jack Valenti, President of the Motion Picture

Association of America (MPAA), urged the

electronics and motion picture industries to

agree on technological means of copy protection for videotapes and movies delivered by

pay cable, PPV, and premium satellite services. 63

SSH. ~sen,~letter to J. Winston, OT& Apr. 17, 1989 (enclosure); H. Rosen, RIAA, letter to J. Winston, 0’I’A, Jun. Z Igag

(enclosure).

eO~NK &murces da~ Cited in Technolo~ and the American Economic Tmnsition: Choices for the Future, OTA-TET-283 Washington, DC: U.S. Government Printing Office, May 1988), p. 268.

61 According~ Jack Vdenti ~PM), “the more a person watches movies on a VCR, the more that person is drawn to vie~ng a movie

in a theater.” Valenti reportedly attributes the rise in movie attendance by theover-40 age group to home VCRviewing. (Bikxud,

Jan. 21, 1989, pp. 7, 94.)

62Acco~ingto Nie]wn M~ia ~wmch, ~though VCR u~ge is rising, py ~d ~sic Cab]e taping is dec]iningas a proportion of VCR

use. For the first quarter of 1987, Nielsen’s data show that recordings from pay and basic cable constitute 9 and 5 percent, respectively,

ofall VCRtapings; forthefirst part of 1988 the figures were 7 and 4 percent, respectively. However, the total number oftapingsduring

these periods increased, from an average of 13 per month to 14 per month. (Catherine Stratton, “Cable Taping Down, VCR Usage

Rising,” Multichannel News, Sept. 12, 1988, p. 24.)

~Amrding to Va.lenti, “,... In the long term best interests of both industries and the paying public, prerecorded videocassettes as

well as movies delivered ma pay cable, pay-per-view, and satellite premium services must be made copyproof. ” (Te/euision/Radio

&e, Feb. 6, 1989, p. 91.)
made some VCR product innovations problematic. For example, when one U.S. company

announced plans to market dual-deck VCRs

in 1984, the motion picture industry’s representatives raised such furor that their introduction was halted. Foreign manufacturers

declined to produce them after being approached by representatives of the motion

picture industry.64

The company filed suit against MPAA and

eight VCR manufacturers; the case was reportedly settled in early 1989.65 Another example is a new home video product that combines a VCR with a personal computer and an

artificial intelligence system. The enhanced

VCR can automatically tape shows matching

a profile of the household’s viewing interests,

then play them back via remote control. The

system works by linking individual units to a

central computer via telephone lines; each

unit scans TV listings and selects shows to be

taped. Because the system uses “at least two”

VCRs, however, it potentially raises concerns

about its use for unauthorized duplication of

prerecorded tapes.66

Some commercial videotapes are manufactured using a copy-protection system that ad

on the copy are further attenuated, to the

point where it produces unstable images when

played. But some “booster cables” or “video

stabilizers’ ) sold, ostensibly to improve picture quality when viewing tapes, could be used

to circumvent copy-protection techniques like

this. 67 A new copy-protection technique intended to “code” movies, sporting events, and

other copyrighted material shown on pay cable and/or PPV services is undergoing laboratory and market tests. The technique reportedly works by fluctuating the per-frame

transmission rate of the film to distort copies

made with a home VCR. The developer hopes

to introduce processed, or “coded” films on a

nationwide basis later in 1989.68

Summary

Technological advances spurring the growing use of home recording devices have substantially changed the nature and extent of

possible home uses of copyrighted material.

Policymakers are now faced with a need to define the appropriate balance between the consequences of technological change and copyright law. The next chapter will analyze the

legal aspects of home copying.

WTV Diges~, vol. 27, No. 26, June 29, 1987, p. 13.

S5~Dige~t, Vo]. 29, No. 10, Mm. 6, 1989, p, 10 The firm, ~.video, has reportedly received $1,8 million in settlements from manufacturers and plans to market the double-deck VCR in 1989. (TV Dzgest, vol. 29, No. 8, Feb. 20, 1989.)

According to MPAA, Go-Video agreed to insert anti-copying devices in all its dual-deck machines. (Jack Valenti, “Peace Treaty Offered between Electronics, Entertainment Interests,” Television/Radio Age, Feb. 6, 1989, p. 91.)

66 The SmmTv system, intr~uc~ by Metaview Corp., is initially being offered at $1$~, ~d is projected to *1I for less th~ $1,000 in

2t03years. (Tom Bierbaum, “RecordingTVFare Without TouchingEithera Video Machine ora Tape,” Variety, Feb. 1-7, 1989, p. 52. )

67 For eup]e ~ ~dve~isement in The New Yorher (Jm. 23, 1989, p. 101) offers a “digital video stabilizer” to e]iminate “video

copyguards, colo~ shi!ls and distortion s.” According to the ad, the device, available for about $50, “is not intended to copy rental movies or copyrighted tapes that may constitute copyright infringement. ”

GaEid~ Corp. product literature (Cambridge, M-A: 1989).
Chapter 3

Legal Aspects of Copyright

and Home Copying
Page

CONSTITUTIONAL BASIS FOR COPYRIGHT LAW . . . . . . . . . . . . . . . . . . . 65

Definition of Copyright .*** o**. **o**.......**.,............*.*. . 65

Copyright Clause . . . . 900* *e. O * * * @ * * * * * o . * * . * * * . . . . . . . . . . . . . . . . . 65

COPYRIGHT LAW OBJECTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

THE DEVELOPMENT AND CURRENT BODY OF COPYRIGHT LAW . . . 67

ANALYSIS OF HOME RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

The Sony Case ● ....,*..,***,**.....***..***,**..*.*......***. * 70

Home Use of Recoding Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

THE INTELLECTUAL PROPERTY SYSTEM AND HOME COPYING . . . . 75

Concept of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Statutory Concept of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . 75

Recent Technological Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

COMPARISON OF THE AMERICAN INTELLECTUAL PROPERTY

SYSTEM WITH OTHER INTERNATIONAL COPYRIGHT SYSTEMS . 78

The United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Great Britain .*. *o** *o". ,oe**o. oe. s.*. ... *.. * * * d . . . . . . . . . . . . . . 81

Canada *o** oo.9*** o.*. *o. .o*. *.** .*. .*. ... ... ..e. d o . **,,*... * 82

France *.*. *o. ..oo*. .*** ..** ... o....**...*.*.......*...*...*** 83

Summary ● **o ”*** O**oe. .*** . . . . . . . . . . . . . . . . . . . . . . . ● **.*****.* 84

CHANGES TO TRADITIONAL AMERICAN COPYRIGHT CONCEPTS . . . 84

International Protection of American Intellectual Property . . . . . . . . . . . 84

Artists’ Rights ..** ***. *.. **m..**..,.**.......,*.*******.*.*.,.* 86
FOR COPYRIGHT LAW

Definition of Copyright

American copyright is a constitutionally

sanctioned and legislatively accorded form of

protection for authors against unauthorized

copying of their “original works of authorship” (17 U. S. C., Sections 102, et sec. (1982) ).1

These works include literary, dramatic, musical, artistic, and other intellectual works. The

copyright owner is given the exclusive right to

use and to authorize various uses of the copyrighted work: reproduction, derivative use,

distribution, performance, and display. Violation of any of the copy-right owner’s rights

may result in an infringement of copyright action. However the copyright owner’s rights in

the work are neither absolute nor unlimited in

scope, however.

Copyright Clause

The U.S. Constitution grants Congress the

power to regulate copyrights. This authority

is contained in the “copyright clause,” which

provides:

Clause 8. The Congress shall have Power . . .

To promote the Progress of Science and the

Authors and Inventors the exclusive Right to

their respective Writings and Discoveries.

(U.S. Constitution, art. I, sec. 8, cl. 8)2

Much of the structure and basis for American law is derived from its British legal antecedents. After the introduction of the printing

press in England in the late 1400s, the

Crown’s first response was to control what

writings were printed or copied. The earliest

British copyright laws were enacted in the

1500s to promote censorship by the government in cooperation with a monopolistic

group of printers known as the Stationers’

guild. 3 This system collapsed when the company failed to exercise discretion as censors,

but used its monopoly power to set high

prices. Parliament’s response in 1695 was to

allow the Stationers’ copyrights to expire, but

this resulted in a period of anarchical publication. In 1709 Parliament responded to the

situation by enacting legislation known as the

Statute of Anne. This statute granted a copyright to authors, as opposed to printers, for a

period of 14 years. The copyright was renewable for an additional 14 years if the author

was still alive. After the expiration of the copyright, the writing became part of the public

domain, available for the use of anyone. This

first modern copyright law became the model

for subsequent copyright laws in Englishspeaking countries.4

‘See: Harry G. Henn, Copyright Primer (New York, NY: Practicing Law Institute, 1979), p. 4.

zIt is instmdive t. consider the si~ificmce of the exact language contained in Clause 8. The use of the Word “writings” si~ifies

that there must be some permanence in the actual form of expression or some specific articulation that can be ascertainable either

directly or through some mechanism. This form of expression is more concrete and definite than basic ideas. “Author” refers to the

creator of the “writings” and indicates that the writing must be the author’s unique and individual work, not taken from another

source. The concept of’’exclusive right” indicates that the rights accruing from copyright ownership repose solely with the owner of

the copyright, who may not necessarily be the creator of the “writing.” Congress has dealt with the aspect of “limited times” in

different ways over the years. In its most recent enactment, the 1976 Copyright Act, Congress determined that “limited times” is the

hfeaftheauthor plus50years. These concepts and the scope oftheircoverage have been subject to judicial review and interpretation.

(See: David Nimmer and Melvin B. Nimmer, Nimmer on Copyright (New York, NY: Matthew Bender, 1988), vol. 1, sec. 1.03 -1.08.)

3See: U.S. Congress, Olllce of Technology Assessment, Intellectual Property Rights in an Age of Electronics and Information, OTACIT-302 (Melbourne, FL: Kreiger Publishing Co., April 1986), pp. 34-36.

41bid.

65
copyrights and the period of time for which

copyrights are granted. The subject matter of

American copyright covers the “writings” of

authors. Under the American copyright system, the authors’ exclusive rights in their

works are granted for a period of time, after

which they revert to the public domain. This

American approach to copy-right embodies a

duality of interest: the stimulation of intellectual pursuits and the property interests of the

copyright owner. These competing concepts

have been a central issue in the development,

implementation, and interpretation of American copyright laws.

COPYRIGHT LAW

OBJECTIVES

A fundamental goal of copyright law is to

promote the public interest and knowledge–

the “Progress of Science and the useful Arts.”

A directly related copyright objective is the

promotion and the dissemination of knowledge to the public. Although copyright is a

property interest, its primary purpose was not

conceived of as the collection of royalties or

the protection of property; rather, copyright

was developed primarily for the promotion of

intellectual pursuits and public knowledge. As

the Supreme Court has stated:

The economic philosophy behind the clause

empowering the Congress to grant patents

and copyrights is the conviction that encouragement of individual efforts by personal gain

is the best way to advance public welfare

through the talents of authors and inventors

in Science and the useful Arts.5

benefits from the creativity of authors and the

economic reality that a copyright monopoly is

necessary to stimulate the greatest creativity

of authors. A direct corollary to this concept is

that the grant of a monopoly would not be justifiable if the public did not benefit from the

copyright system. Melvin Nimmer observed

that the Framers of the Constitution regarded

the system of private property as existing per

se for the public interest. Therefore, in recognizing a property status in copyright, the

Framers extended a recognition of this public

interest into a new realm.6 Thus, policy arguments that equate copyright with royalty income, or theories that assert that copyright is

necessary in order to secure royalty income,

run counter to this theory and appear to be inconsistent with the intent of the Framers.

The Supreme Court is well aware of these

competing values and expressed its recognition in the 1984 Sony case:

As the text of the Constitution makes plain,

it is Congress that has been assigned the task

of defining the scope of the limited monopoly

that should be granted to authors or to inventors in order to give the public appropriate access to their work product. Because this task

involves a difficult balance between the interest of authors and inventors in the control and

exploitation of their writings and discoveries

on the one hand, and society’s competing interest in the free flow of ideas, information,

and commerce on the other hand, our patent

and copyright statutes have been amended repeatedly.7

The concept of copyright presents a seeming paradox or contradiction when considered

within the context of the First Amendment

freedom-of-speech guarantees: while the First

‘Mcuer v. Stein, 347 U.S. 201, 219 (1954).

SNimmer, op. cit., footnote 2, VO1. 1, ~. 1~2. 1“

rsony COP- v. Unlve=al Cio Studios, Inc. 464 U.S. 417, 429 (19M).
tion. It can be argued, however, that copyright, to the degree that it stimulates expression and encourages writing and other efforts,

furthers First Amendment expression values

by encouraging the quantity of “speech” that

is created. In attempting to resolve these conflicting interests, the courts have adopted a

test that weighs the interests of freedom of expression and the property interests of the

copyright holder to arrive at an acceptable

balance. 8 An extensive body of case law has

been developed that weighs and counterbalances First Amendment concerns and the

rights of the copyright holder.9

Hence, the American copyright system is

based on two competing interests: intellectual

promotion and property rights. 10 Combined

with these factors is the First Amendment

freedom-of-expression concern. Courts have

balanced and assessed these seemingly conflicting elements, and Congress has considered them in enacting copyright legislation.

THE DEVELOPMENT AND

CURRENT BODY OF

COPYRIGHT LAW

After severing political ties with Great Britain, the former American colonies sought

right legislation. All of the States except Delaware enacted some form of copyright statute,

although the various State laws differed

greatly .11 Because of the differences in the

State copyright laws and the ensuing difficulties, the Framers of the Constitution, notably

James Madison, asserted that the copyright

power should be conferred to the legislative

branch.

12 This concept was ultimatel y

adopted, and Congress was granted the right

to regulate copyright. (Art. I, sec. 8, cl. 8).

The First Congress in 1790 enacted the first

Federal copyright act.13 This legislation provided for the protection of the authors’ rights.

Commentators have written that the central

concept of this statute is that copyright is a

grant made by a government and a statutory

privilege, not a right.14 The statute was substantially revised in 183115 to add copyright

coverage to musical compositions and to extend the term and scope of copyright. A second general revision of copy-right law in 187016

designated the Library of Congress as the location for copyright activities, including the

deposit and registration requirements. This

legislation extended copyright protection to

artistic works. The third general revision of

American copy-right law in 190917 permitted

copyright registration of certain types of unpublished works. The 1909 legislation also

aNimmer, op. cit., footnote 2, vol. 1, *. 1.10

%ee: Harpv- & Row, Publishers, Inc. v. Nation Enterprise, 471 U.S. 539 (1985).

‘ Whe Recording Industry Association of America, Inc. OUAA) does not discern a tension between these interests. The RIAA contends that the availability of copyright protection stimulates the creative process and protects the copyright owner’s property interest in the prcduct of the creative process. The RL4A believes that the two factors are mutually reinforcing, not antagonistic. (H.

Rosen, RIAA, letter to J. Winston, OT& May 2, 1989, enclosure with comments on drafl ch. 5.)

~ ILymm my Pat,terWn, Copyrzght in Hls~rla/ Perspective (Nashville, TN: Vanderbilt University Press, l~fi~, P. 183.

lz~ld., pp. 192-193.

IWh. 15, 1, 1 Stat. 12. See: OTA-CIT-302, op. cit., footnote 3, p. 64.

14patterson, op. cit., footnote 11, PP. 19S1W.

‘54 stat. 436.

IBAct of Ju]y 8, 1870, C. 230, 16 Stat. 198.

ITAct of Mm, 4, 190!3, C. 320, 35 %lt. 1075.
tection to certain sound recordings.18 The

fourth and most recent overhaul of American

copyright law occurred in 1976, after years of

study and legislative activity.19 The 1976 legislation modified the term of copyright and,

more significantly, included the fair-use concept as a limitation on the exclusive rights of

the copyright holder.

Throughout the evolution of American

copyright law, the central driving force was

the desire to keep legislation in pace with

technological developments that affected the

dissemination of knowledge.20 As the U.S. Supreme Court summarized recently in the

Sony copyright decision:

From its beginning, the law of copyright has

developed in response to significant changes

in technology.... Indeed, it was the invention

of a new form of copying equipment – the

printing press– that gave rise to the original

need for copyright protection.... Repeatedly,

as new developments have occurred in this

country, it has been the Congress that has

fashioned the new rules that new technology

made necessary.21

The 1976 Act set out the rights of the copyright holder, which include: the reproduction

of works in copies or phonorecords; creation

of derivative works; distribution of copies of

the work to the public by sale, rental, lease, or

does, however, specify certain exceptions to

the copy-right owner’s exclusive rights that are

noninfringing uses of the copyrighted works.

These exceptions include the “fair use” of the

work (17 U. S. C., sec. 107 (1982)), reproduction by libraries and archives (17 U. S. C., sec.

108 (1982)), educational use (17 U. S. C., sec.

110 (1982)), and certain other uses.

A clear understanding of the fair-use exception is of extreme importance, as the concept

of “home use” appears to be a judicially created derivative of the fair-use doctrine. This

doctrine has been applied when certain uses of

copyrighted works are defensible as a “fair

use” of the copyrighted work.22 It has been

said that this doctrine allows the courts to bypass an inflexible application of copyright law,

when under certain circumstances it would

impede the creative activity that the copyright law was supposed to stimulate.23 Various approaches have been adopted to

interpret the fair-use doctrine. Some commentators have viewed the flexibility of the

doctrine as the “safety valve” of copyright

laws. Others have considered the uncertainties of the fair-use doctrine the source of unresolved ambiguities. Some commentators contend that the fair-use doctrine has been

applied prematurely at times, such as in the

case of “home use,” where the doctrine is used

as a defense to a claim of infringement. They

la~b]ic ~W 92-140, CM,. 16, 1971, w Sht. 391.

lg~b]ic ~w 94453, Oct. 19, 1976, 90 Stat. 2541, codified at 17 U.S.C. sec. 101, et seq. (1982).

mRich~d Wincer and Irving M~de]], Co~right, Patents, and Trademarks: The Protection of Intellectual Property (Bbbs Ferry,

NY: Oceana Publications, 1980), p. 25.

z1464 U.S. 417, 430-431 (1984).

zz~fore c~ificatlon of the “f~r-u=” exception in the 1976 copyright act, the fair-use concept was upheld in a common law copYright action in Hemingway v. Randbm House, Inc., 53 Misc.2d 462,270 N.Y.S. 2d 51 (Sup. Ct. 1967), a~don othergrounds 23 NY.2d

341, 296 N.Y.S.2d 771 (1968). The common law concept of “fairuse” wasdevelopedover manyyears bythecourtsofthe United States.

See, for instance, Folsom v. Marsh, 9 F.Cas. 342 (N. 4901) (C.C.D. Mass. 1841) :Mathezas Conu.eyor Co. v. Palmer-Bee Co., 135 F.2d 73

(6th Cir. 1943).

23* HaWr & Row, &blishem, Inc. v. Nation EnteWm”ses, 47 ~ U.S. 539 ( ~985); Iowa State University Reseamh Foundation, Inc. V.

American Bmadcas ting Co., 621 F.2d 57 (2d Cir. 1980).
gp, 

whether any infringement had ever occurred. 24 The judicial interpretations of the

fair-use doctrine discussed below have a situation in which there exist concurrently the

statutory concept of fair use — “the law” — and

the “judicially creatd” or case-law derivatives of fair use, such as the concept of “home

use.))

In codifying the fair-use exception in the

Copyright Act of 1976, Congress did not formulate a specific test for determining whether

a particular use was to be construed as a fair

use. Rather, Congress created statutory recognition of a list of factors that courts should

consider in making their fair-use determinations. The four factors set out in the statute

are:

1.

2.

3.

4.

the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

the nature of the copyrighted work;

the amount and substantiality of the

portion used in relation to the copyrighted work as a whole;

the effect of the use on the potential market and value of the copyrighted work

(17 U. S. C., Sec. 107 (1982)).

ing equities.”25 It appears that Congress developed a flexible set of criteria for analyzing

the circumstances surrounding each “fairuse” case, and that each case would be judicially analyzed on an ad hoc basis.26 Therefore, courts seem to have considerable

latitude in applying and evaluating fair-use

factors.

Courts have given different weight and interpretation to the fair-use factors in different

judicial determinations. The following illustrations demonstrate how some courts have

interpreted certain fair-use factors. In evaluating the first factor, the purpose and character of the use, courts have not always held that

use “of a commercial nature” negates a fairuse finding,27 nor does a “nonprofit educational” purpose mandate a finding of fair

use.28 A defense of fair use on the basis of the

first criterion will more often be recognized,

however, when a defendant uses the work for

educational, scientific, or historical purposes. 29 Consideration of the second factor,

the nature of the copyrighted work, must be

based on the facts and circumstances of each

particular case. For instance, courts have interpreted the scope of the fair-use doctrine

narrowly for unpublished works held confidential by their authors.30 In examining the

third factor, the amount and substantiality of

the portion of the work used, courts have

looked at both the quantitative aspect –how

24E]~r~n1c Industries &s~iation (EIA), letter to D. Weimer, c/o OTA, Apr. 28, 1989. The EIA asserts that there is a “sbtutory

exemption” for home taping under the Copyright Act and that the legality of home taping does not depend on the fair-use doctrine.

25H.R. Wp. No. 1476, 94th Cong., 2d sess. 65 (1976).

26=:EM, op. ~it., f~tnote 24. ‘The Em ~]ieves that the efistingd~trine of fair use is suficient to adapt to existing ~d emerging

recording technologies and is adeyuate to address the home taping issue.

NHaPr & ROU, ~bli~hem, Inc. V. Nation Enterprises, 471 U.S. 539,593 ( 1985) (Brennan, J., dissenting); consumers union Of U. S.,

Inc. v. Geneml Signal COP., 724 F.2d 1044 (2d Cir. 1983).

2t3Mamu~ v Crew@, 695 F.2d 1171 Wth Cir. 1983).

2% Italian Book Corp. v. American B roa.aksting Cos., 458 F. Supp. 65 (S.D. NY. 1978).

30A r~ent ~a= ~~im]ating the f~r u= dWtrine invo]v~ the ~rmn~corres~ndence of author J.D. %dinger. The COUti determined that the author had a copyright interest in his correspondence. Salingerv. Random House, Inc., 811 F.2d 90 (2d Cir. 1987), cert.

denied, 108 S. Ct. 213 (1987).
usually not considered to be applicable when

the copying is nearly a complete copy of the

copyrighted work, or almost verbatim.33 As

will be seen below, however, the concept of

“home use” is an exception to this general rule

of fair use. In assessing the fourth factor,

courts have examined the defendant’s alleged

conduct to see whether it poses a substantially

adverse effect on the potential market for or

value of the plaintiff’s present work.34 These

fair-use considerations illustrate the great

care courts take in applying the fair-use doctrine on a case-by-case basis.

Anyone who violates the exclusive rights of

the copyright owner may be considered to be

an infringer of copyright.35 The copyright

statutes provide that the copyright owner

may institute an action for infringement

against the alleged infringer (17 U. S. C., sec.

501(b)(1982)). A court may issue an injunction

against the copyright infringer to prevent further infringement of the copyright (17 U. S. C.,

sec. 502 (1982)). An infringer of a copyright

may be subject to the payment of actual damages and profits to the copyright owner (17

U. S. C., sec. 504 (b)(1982)); or in certain circumstances the copyright owner may elect to

receive specified statutory damages in lieu of

actual damages and profits (17 U. S. C., sec.

U. S. C., sec. 505 (1982)). Criminal sanctions

may also be imposed for copyright infringements in certain cases (17 U. S. C., sec. 506

(1982)).

ANALYSIS OF HOME

RECORDING

The Sony Case

American courts have been called on to examine home recordings within the context of

videocassette recorders (VCRs). The home use

of VCRs under certain circumstances was

carefully analyzed, and after a series of conflicting lower court judgments, was approved

by the U.S. Supreme Court.36 In the Supreme

Court action, Universal City Studios (the

plaintiffs/respondents) did not seek relief

against the actual users of the VCRs; instead,

Universal sued the VCR manufacturers and

suppliers, primarily, Sony, on the basis of contributory infringement.37 This theory was

based on the argument that the distribution

and sale of VCRs encouraged and contributed

to the infringement of the plaintiffs’ copyrighted works.38 Universal sought monetary

damages and also an injunction that would

prohibit Sony from manufacturing VCRs in

slcon~umers Union of U.S., Inc. V. General Signal C’0~., 724 F.2d 1044 (2d Cir. 1983).

sZMUtone. Gmham V. Burtchaell, 80S F.2d 1263 (2d Cir. 1986).

sswalt ~~nq ~uc~ons v. Air ~’~tes, 581 F,’M 751 (9th Cir. 1978), cert. denied 439 U.S. 1132 ( 1978).

34Thi~ factor ~a~ “f ~on~iderab]e impo~ce in the Sony cases discussed &j]ow. ~, ~SO, consumers u71ZO?l Of U. S., Zn(.’. V. (kTle?d

Signal Corp., 724 F.2d 1044 (2d Cir. 1983).

M 17 USC. 501(a)( 1982). For a Comp]ete discussion of the remedies for copyright infringement, SW: Henn, op. cit., fOOtnOte 1, pp.

245-267.

seunivema~ Ciw S~dLos, ~nc. v. Sony COW. of~erlm, 480 J?.supp. 429 (D.c. cd. 1979), rev’d, &59 F,2d 963 (9th Cir. 1981), rev’d,

464 Us. 417 ( 1984).

37sony Cow. v. Unluema/ Czv StudLos, ~nc, 464 U.S. 417 ( 1984). In the district COUrt adion, Universtd had ako sought re]iefagainst

an actual VCR user.

38~id., ~p, J20-A21, 434. ‘~It is, however, the ~plngof respondents’ own copyrighted programs that provides them with the st~ding to charge Sony with contributory infringement. To prevail, they have the burden of proving that users of the Betamax have infringed their copyrights and that Sony should be held responsible for that infringement.”
y p

the context of home taping/recording. The

Court determined that the key issue to be resolved was whether the sale of Sony’s equipment to the public violated any of the rights

given to Universal by the Copyright Act.39

First, the Court considered the exact nature

of the relationship between Sony and its purchasers. The Court determined that if vicarious liability was to be imposed on Sony, such

liability had to be basal on the constructive

knowledge that Sony’s customers might use

the equipment to make unauthorized copies

of copyrighted material. The Court observed

that there exists no precedent in copyright law

for the attribution of liability on the basis of

such a theory.@ Therefore, it was argued that

the sale of such copying equipment is not

deemed to be contributory infringement if the

product is capable of other uses that are noninfringing. To respond to this issue, the Court

deliberated whether the VCR was able to be

used for commercially significant noninfringing uses. The Court concluded that the VCR

was capable of such noninfringing uses

through private noncommercial time-shifting

activities in the home. In reaching this determination, the Court relied heavily on the findings of the district court and rejected the conclusions of the court of appeals. The Court’s

conclusions were based on the idea that Universal cannot prevent other copyright holders

from authorizing the taping of their programs

and on the finding of fact by the district court

gg 

tributory infringement against the seller of

copying equipment, the copyright holder cannot succeed unless the relief affects only the

holder’s programs, or unless the copyright

holder speaks for virtually all copyright holders with an interest in the outcome.42 The

Court determined that the copyright holders

would not prevail, since the requested relief

would affect other copyright holders who did

not object to home time-shifting recording.43

After examining the unauthorized timeshifting use of VCRs, the Court determined

that such use was not necessarily infringing.44

On the basis of the district court’s conclusions, the Court determined that the potential

harm from time-shifting was speculative and

uncertain. The Supreme Court arrived at two

conclusions. Sony demonstrated that various

copyright holders who license their works for

broadcast on commercial television would not

object to having their programs time-shifted

by private viewers. Also, Universal did not

prove that time-shifting would cause the likelihood of nonminimal harm to the potential

market for or the value of their copyrighted

works.45 Therefore, home use of VCRs could

involve substantial noninfringing activities,

and the sale of VCR equipment to the public

did not represent a contributory infringement

of Universal’s copyrights. The scope of the

Court’s holding was expressly limited to video

recording in the home, to over-the-air noncommercial broadcasting, and to recording

3gIbid., p. 423.

401bid., p. 439.

4’Ibid., p. 442.

421bid., p. 466.

431bid.

“Ibid., p. 446.

451bid., p. 456.
y g

corded programs. In reaching its determinations, the Court rejected the central finding of

the court of appeals that required that a fair

use had to be “productive.’)46 Rather, the

Court determined that under certain circumstances, the taping of a video work in its entirety for time-shifting purposes would be allowable under the fair-use doctrine.47 I t

should be considered that these findings are

“case-law” or “judicially made law” and not

statutory law.

Relying substantially on the findings of the

court of appeals, the dissenting opinion asserted that there was potential harm to Universal through the use of home video recording.48 Hence, the dissent concluded that there

was no exception for home video recording

under the fair use doctrine of current copyright law scheme.49

Despite their differing views, both the majority and the dissent inferred that Congress

may wish to examine the home video recording issue.50 As the majority opinion stated:

It may well be that Congress will take a

fresh look at this new technology, just as it so

often has examined other innovations in the

past. But it is not our job to apply laws that

have not yet been written.51

courts have provided some guidance for interpreting copy-right law in home recording/taping situations, many questions and issues remain unresolved. It should be considered that

the previously discussed Sony case was a narrow holding, strictly limited to a very specific

situation — home video recording of noncommercial or “nonpay” television for time-shifting. The practical application of current copyright law and related judicial interpretations

are here considered within the context of certain typical home recording and viewing situations.

Photo Credit: Office of Technology Assessment

Some consumers have used VCRs to create large home

video libraries.

ce~id., pp. 454-455.

4T~id., pp. 449-450.

ca~id., pp. 482-486.

49~1d., p. 475. The d=ision in the case was a 5-4 vote (mqjority: Stevens, Burger, Brennan, White, ~d O’Connor; dissent: Blackmun, Marshall, Powell, and Rehnquist).

50~1d., p. 456 (majority), p. 500 (dissenting). The RI&4 takes the position that the COUrt “eXpreSs]y suggested” that ConFTess

examine the home video rmrding issue. (H. Rosen, op. cit., footnote 10. )

“I bid., p. 456.
g qp

mining what constitutes a “home.” Although

current copyright law and regulations do not

specifically define what constitutes a “home,”

certain inferences can be drawn from the

statutory definition provided for the public

performance of a work:

To perform or display a work “publicly”

means —

(1) to perform or display it at a place open to

the public or at any place where a substantial

number of persons outside a normal circle of a

family or its social acquaintances is gathered.52

An inference can be drawn from the language

that the opposite of a “public” display of a

work might be a “home,” or a private display

of the work. In considering this proposition, it

could be inferred that a home would signify a

place not open to the public and/or a place

where only a family and/or its social acquaintances are gathered.

A review of the legislative history pursuant

to the passage of copyright legislation gives

some insight into the congressional intent

concerning the concept of a home. The accompanying legislative history of the Sound Recording Amendment of 1971 appears to indicate that Congress meant the term "home” to

include only the traditional, generally conceived concept of an individual’s own home. A

statement in the 1971 House Report on audio

recording provides some insight into the

meaning of home recording “where home recording is for private use and with no purpose

of reproducing or otherwise capitalizing com

pppp

some guidance for the concept of home use.

One of the principal purposes of the definition [“public performance”] was to make clear

that,... performances in “semipublic” places

such as clubs, lodges, factories, summer

camps, and schools are “public performances”

subject to copyright control. The term “a family” in this context would include an individual living alone, so that a gathering confined

to the individual’s social acquaintances would

normally be regarded as private. Routine

meetings of businesses and governmental personnel would be excluded because they do not

represent the gathering of a “substantial

number of persons.”-

It therefore appears from the legislative history of both the 1971 and 1976 copyright laws

that the concept of a “home” is limited to the

traditional meaning of the term and that certain other “semi-public” situations are to be

considered as “public” places for the purposes

of copyright law.55

The district court in the Sony case examined the concept of home use and its limits:

“Home-use” recording as used in this opinion is the operation of the Betamax in a private home to record a program for subsequent

home viewing. The programs involved in this

lawsuit are broadcast free to the public over

public airwaves... the court’s declaration of

non-infringement is limited to this home-use

situation.

It is important to note the limits of this

holding. Neither pay or cable television stations are plaintiffs in this suit and no defendant recorded the signals from either. The

court is not ruling on tape duplication within

5217 USC 101 ( 1982).

xiu,s ConWe~~, Hou= CommittW on the Ju(~lclW, sound Rem~zngs, Repr~ Acmmpanying S.646, serial No. 92-487, September

1971.

MU s conme~s, HOUW Committ= on the JtldiciW, RePrt t. Acmmpny 5.22, seri~ No. 94.-1476, Septem&r 1976. (This WaS the ,.

congressional report accompanying the last major copyright revision. )

55Me]~]]e Nimmer, ‘{copyright Liability for Audio Home ~or~ing: Dispelling the ‘~tam~’ Myth, ” Vir&’nia bW Reuiew, VO]. 68,

1982, pp. 1505, 1518-1520.
e.g., by teachers for classrooms, corporations

for employees, etc. No defendant engaged in

any of these activities and the facts necessary

to determine their legality are not before this

court. 56

The court of appeals and the Supreme Court

did not contradict the district court’s concept

of a home or the factual circumstances involved with the home taping in the Sony case.

It seems certain that the Sony decisions envisioned a home as a private home. Not all recordings made in a home would necessarily fit

with the home-use exemption, however.57

Since the Sony decision, courts have examined various concepts of home recording. A series of cases has examined public performance

and home use within the context of VCR viewing. This line of cases has held that the viewing

of copyrighted videocassettes in private

rooms at video stores constitutes public performance, 58 even when members of a single

family viewed a cassette in a private room at

the store.59 These cases illustrate that American courts are very careful in categorizing

various situations as a “home” for the purposes of copyright law. Ruling that these viewings were public performances, the courts

held that they were subject to the provisions

of copyright law.60

Two recent cases brought new judicial scrutiny to the home use concept. In one case, a

condominium association held weekly dances

g

the musicians. Representatives of the owners

of the copyrighted music that was played at

the dances brought an infringement action

against the association and won.61 The importance of this case is that the district court recognized and discussed a “family exception’)62

from copyright liability that the court derived

from the “public performance” definition of

section 101 of the 1976 Copyright Act. The

court determined that the condominium’s

situation did not fall within this so-called

“family exception,” and gave judicial recognition to a “family exception” under section

101. In a 1986 decision, a district court held

that a private club did not fit within the concept of a home and hence copyrighted materials performed or viewed there were subject to

the copyright laws.63 While these cases did not

involve home audio or video recording or

viewing, they do illustrate the limited concept

of a “home” as interpreted by the courts and

the recently articulated “family exception”

doctrine of copyright law. The courts have

been sparing in the application of “home use”

to situations other than the traditional home

setting.

Applying copyright law and the relevant judicial guidance can lead to various conclusions about home recording in particular circumstances. The Sony case affirmed the use of

VCRs to record and replay commercially televised programs for personal use. The concept

594/3(3 FSUPP. 429, 442 (D.C. Cal. 1979), reu’d, 659 F.2d ~(~h Cir. 1981).

57A VCR ~ou]d & ~~ in ~ home t. m~e copies of a copyright~ ~pe, hence infringing on the copyright owner’s rights.

Tolumbia l%ctures Indus. v. Redd Home Inc., 568 F. Supp. 494 (W.D. Pa. 1983), a~d., 794 F.2d 154 (3rd Cir. 1984).

59co/umbla ~c~ms zndust~s, ~nc, v. Auem) Znc,, fjlz F. Supp. 315, 319 (N. D. Pa. 1985), afld., 800 F.2d 59 (3rd Cir. 1986).

60~though these ca=~ were factu~]y different from the Sony ca~s, they i]]ustrate the reluctance of COUrtS tO US(2 the COllCf2pt Of

“home use” in situations that do not fall vvithin the traditional concept of the home.

e~Hinton v. Main/an& of Tamamc, 611 F. SUpp. 494 (S.D. Fla. 1985).

sz~id., pp. 495-496.

63AchEY i%fusic, Inc. v. Williams, 650 F.Supp 653 (D.lGM. 1~).
case did not, however, address audiotaping, or

home taping of cable or “pay” television.

THE INTELLECTUAL

PROPERTY SYSTEM AND

HOME COPYING

Concept of Intellectual Property

Intellectual property is a unique conception

of an inherent and intangible property right in

an artistic, scientific, or intellectual work.

Sometimes characterized as a “bundle of

rights, ” intellectual property rights inhere in

a particular creation.64 The intellectual property concept is a unique representation or embodiment of expression which is invested in an

artistic, scientific, or intellectual work. This

contrasts with the concept of personal property, which governs the ownership of the actual works themselves. Applying these property concepts to particular examples is

instructive to distinguish between them. An

example of personal property would be a specific phonorecord with a particular musical

composition recorded on it. Thus, the

phonorecord is personal property–the medium in which the intellectual property is imbedded-while the musical composition/ arrangement/instrumentality that is embodied

in all phonorecords with this particular musical composition recorded on it represents the

intellectual property. Therefore, the individual phonorecord represents the personal

property right, but the artistry, the arrange

tual property right. Thus, the concept of an

intellectual property right involves the right

to create works in particular characterizations.65

Statutory Concept of Intellectual

Property

The 1976 Copyright Act embraces the concept of the existence of intellectual rights that

are separate from the physical ownership

rights in the copyrighted works:

Sec. 202. Ownership of copyright as distinct

from ownership of material object

Ownership of a copyright, or of any of the

exclusive rights under a copyright, is distinct

from ownership of any material object in

which the work is embodied. Transfer of ownership of any material object, including the

copy or phonorecord in which the work is first

freed, does not of itself convey any rights in the

copyrighted work embodied in the object; nor,

in the absence of any agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property

rights in any material object. (emphasis

added) 66

The House Report accompanying its enactment analyzes this concept:

The principle restated in section 202 is a

fundamental and important one: that copyright ownership and ownership of a material

in which the copyrighted work is embodied

are entirely separate things. Thus transfer of

a material object does not of itself carry any

rights under the copyright, and this includes

transfer of the copy or phonorecord– the

64U.S. c~ngress, serial No. 94-14’76, op. cit., fOOtnOte 5A, P. 12A.

IMFor the pur~~es of this rep~, the di=ssionof inte]]~u~ propefiy rights w-i]] & ]imited to only those rights that specificd]y

involve American copyright law. Intellectual property rights may also involve patents, for example.

6517 U.S.C. 202 ( 1982).
pg

first fixed. Conversely, transfer of a copyright

does not necessarily require the conveyance of

any material object.67

American courts have examined and upheld

this concept of intellectual property recognition. 68

The development of a process enabling the

electronic transfer of various creative works

has raised the question as to whether an actual physical embodiment of the work must

exist to apply the concept of intellectual property. A careful reading of the entire copyright

statute and an examination of the legislative

history indicate that there need not be an actual physical copy or embodiment of the copyrighted work for the concept of intellectual

property to inhere in the work. The copyright

statute uses the concepts of both “phonorecord” 69 and of a work being “fixed.”70 In addition to these concepts, it appears from the

statutory directives that works that may be

electronically or otherwise transmitted would

be covered by the statutory provisions governing intellectual property. The legislative history of the 1976 Copyright Law Revision rein

Under the bill, it makes no difference what

the form, manner or medium of fixation may

be–whether it is in words, numbers, notes,

sounds, pictures, or any other graphic or symbolic indicia, whether embodied in a physical

object in written, printed, photographic,

sculptural, punched, magnetic, or any other

stable form, and whether it is capable of perception directly or by means of any machine or

device now known or later deueloped. [emphasis added]71

Therefore, the concept of intellectual property covers electronic transfer or transmission

of a work, so long as the work is “fixed,” even if

the work is not in a “physical” form.

Recent Technological Developments

Recently, great interest has been given to

the intellectual property rights in audio and

visual works. One reason for this increased interest has been the technological revolution

that has occurred since the last major revision

of American copyright law in 1976. Since this

revision went into effect in 1978, there have

been major technological advances that allow

easy and effective copying of many copyrighted works. While the 1984 Sony case exe~.s. Congess, seri~ No. 1476, op. cit., footnote 54, P. 124.

M*, for instmce) ~iha COW. V. Ci~ of Kansas Ci~, Mo., 582 F. Supp. 343 (D.C. Mo. 1983). In this action, the COUrt examined

whether a company, in transferring certain documents to a municipal corporation, had also transferred its actual intellectual property copyright in these items. The court determined that in following the copyright statute, the copyright of the objects was indeed

distinct from the actual ownership or possession of the object.

89The ~pvight s~tute defines phonorecord as follows:

“Phonorecords” are material objects in which sounds, other than those accompanying motion picture or other audiovisual work,

are fried by any method now known or later developed, and from which the sounds can be perceived, reproducd, or otherwise communicated, either directly or with the aid ofa machine or device. The term “phonorecords” includes the material object in which the

sounds are first freed. (17 U. S. C., sec. 101 (1982)).

mThe ~pyight s~tute defines a work as being fued under the f’Ol]Owing CircumsbCeS:

A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of

the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of

more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of

this title if a f~tion of the work is being made simultaneously with its transmission. (17 U. S. C., sec. 101 (1982)).

71u.s. ConWess) Serial No. 94-1476, op. cit., footnote 54, P. 52.
curred since this last judicial determination.

Among these are the advent of compact disc

players and digital audiotape (DAT).72 Other

changes include growth in the home video cassette industry 73 and product improvement

and declining prices for audio and video recording equipment. While these developments may be truly considered advances for

mankind and intellectual development, they

raise a myriad of copyright questions that

were not directly addressed in either the 1976

revision of the copyright law or in the 1984

Sony case.74

Although clearly there is a statutory recognition of fair use of copyrighted works, and

the courts have created a limited concept of

“home use” for certain home videocassette recorder use, the impact of effective and relatively inexpensive sophisticated visual and

audio recording equipment has not been legislatively or judicially analyzed in depth. As has

been illustrated in the nearly 200 years of

American copyright law, however, Congress

has attempted to respond legislatively to technological advances that have altered the balance of the traditionally competing factors in

copyright: the property rights of the copyright holder and the stimulation of the public’s knowledge. This congressional responsiveness was discussed at length in the

The history of copyright law has been one of

gradual expansion in the types of works accorded protection, and the subject matter affected by this expansion has fallen into two

general categories. In the first, scientific discoveries and technological developments have

made possible new forms of creative expression that never existed before. In some of

these cases the new expression forms-electronic music, filmstrips, and computer programs, for example-could be regarded as an

extension of copyrightable subject matter

Congress had already intended to protect, and

were thus considered copyrightable from the

outset without the need of new legislation. In

other cases, such as photographs, sound recordings, and motion pictures, statutory enactment was deemed necessary to give them

full recognition as copyrightable works.75

The House Committee on the Judiciary emphasized that the 1976 revision was not inflexible and would itself probably be revised, and

that the Committee did not intend to “freeze

the scope of copyrightable technology.”76 The

Committee also alluded to “other areas of existing subject matter that this bill does not

propose to protect but that future Congresses

may want to.”77

This tradition and practice of Congress’ responding to technological changes has been

recognized by the Supreme Court in its decision in the Sony case:

72%: ~n~dK Jur~n, “consumer Electronics, “ in “Technolo~ ‘SS,” IEEE Spectrum, January 19S8, p. 56.

Ta~id,, pp. 112-114.

Tq&me of the= ]e@ ~d ~]iw ~estions inc]ude: What are the precise legal boundaries of the judicial theory of” home use”?

When does recording done in the “home” not constitute “home use”? What, if any, enforcement mechanism scou]d be used to protect

copyright holders’ rights? Another rather fundamental question is whether the development of digital recording– which produces

very high quality copies — represents a “quantum leap” in recording technology and therefore indicates the desirability of a major

revision in the American system of copyright law. Does the digital representation ofa musical or image/pictorial composition represent a fundamental technological change to which the American copyright system must respond in a substantive manner?

T5U.S. ConWess, Serial No. 94-1476, op. cit., footnote 54, p. 51.

781bid.

771bid., p. 52.
a new form of copying equipment – the printing press — that gave rise to the original need

for copyright protection. . . . Repeatedly, as

new developments have occurred in this country, it has been the Congress that has fashioned the new rules that new technology

made necessary.78

Therefore, it may well be, as the Supreme

Court implied in the Sony decision,79 that

Congress may wish to examine and act in response to the numerous technological advances that have occurred in the information

recording and dissemination areas. If Congress does choose to act in this area, it may

wish to examine the approaches taken in

other countries.

COMPARISON OF THE

AMERICAN INTELLECTUAL

PROPERTY SYSTEM WITH

OTHER INTERNATIONAL

COPYRIGHT SYSTEMS

This section describes and analyzes certain

aspects of the intellectual property protection/copyright systems in the United States,

Great Britain, Canada, and France that relate

to home copying. Although the United States,

Great Britain, and Canada share historical

roots in the development of national copyright laws, significant differences in their intellectual property systems exist. France, with

a tradition of national support and protection

The United States

As has been previously discussed, the

American copyright law has its origins in English common and statutory law. Despite these

colonial British roots, American copyright law

has developed to suit the specific needs and

outlooks of the United States. A fundamental

tension in the development of American copyright law relates to the competing concerns

for the ownership/property rights of the

author/creator/owner and the goal of free dissemination of information for the public

good. Traditionally, the United States has espoused a free enterprise system that did not

pursue a national policy to promote the arts,

and American copyright law reflected these

doctrines. For instance, there has never been

statutory recognition of artists’ or moral

rights, and the statutory embodiment of intellectual property rights is a relatively recent

occurrence. It does, however, appear that

there is a growing trend in American law and

philosophy to recognize creative rights.

While the basic legal framework of American copyright law has been previously discussed in this chapter, considering specific aspects of American copyright law will provide

insight into the concepts of home copying. In

particular, it would be instructive to examine

the “first-sale” doctrine and recent amendments that have been enacted concerning record rentals. The principle of the “first-sale”

doctrine, in practice, upholds the copy-right of

the copyright owner during the first sale or

78464 l_J.S 417, 430-431 ( IW).

‘

g

Ibid., p. 456.

aoone ~on=Wence Of this distinction is that the French Government imposes a levy on both audio- md videotapes since ~ern~r

1986. In addition, other countries have introduced levy schemes. For additional discussion of international systems dealing with

performance rights in sound recordings, see ch. 5.
q

Report accompanying the original (1976) legislation provided an example of the application of the “first-sale” doctrine.

Thus, for example, the outright sale of an

authorized copy of a book frees it from any

copyright control over its resale price or other

conditions of its future disposition. A library

that has acquired ownership of a copy is entitled to lend it under any conditions it chooses

to impose.82

The “first-sale” doctrine has been upheld in

recent court decisions. Thus, when a copyrighted work is subject to a valid first sale, the

distribution rights of the copyright holder are

extinguished, and the title passes to the

buyer. 83

Congress enacted a significant statutory

modification to the “first-sale” doctrine was

enacted in the “record rental amendments” to

American copyright law in 1984.84 This legislation was designed to help deal with the situation where record rental stores purchased record albums – the first sale – and then leased

the albums for a fee that represented a small

portion of the purchase price. The lessee frequently taped the rented record. It was argued

that the use of the rental record may have displaced a potential sale of the actual record.85

Congress thus amended the “first-sale” doctrine:

(b)(l) Notwithstanding the provisions of

subsection (a), unless authorized by the own

for purposes of direct or indirect commercial

advantage, dispose of, or authorize the disposal of, the possession of that phonorecord by

rental, lease, or lending, or by any other act or

practice in the nature of rental, lease, or lending. Nothing in the preceding sentence shall

apply to the rental, lease, or lending of a

phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution. (emphasis added)86

The practical effect of this amendment is to

prohibit the rental of such sound recordings

without the copyright owners’ permission. In

actual practice the copyright owners – usually

the recording companies–have not authorized record rental, and as a result record

rental is not an industry in the United States.

Another aspect of home audio recording occurs when an individual tapes music broadcast on the radio, or records from tapes or records for personal use in the home or for

“time-shifting” purposes. Congressional intent underlying the Sound Recording Amendment of 1971 was very clearly to continue to

permit certain home taping:

Specifically, it is not the intention of the Committee to restrain the home recording, from

broadcasts or from tapes or records, of recorded performances, where the home recording is for private use and with no purpose of

reproducing or otherwise capitalizing commercially on it. This practice is common and

unrestrained today, and the record producers

.gl ]7 USC 1~ ( 1982 & SUPP. ‘> 1987~

W% U.S. Conwess, serial No. 94-1476, op. cit., footnote 54, p. 79.

‘See, T.B. Harms Co. v. JEM Records, Inc., 655 F. Supp. 1575 (D. C.N.J. 1987); Walt Disney %oductions V. Bmmajian, 6XI0 F. Supp.

439 (D. C.N.Y. 1984). See also: Nimmer, op. cit., footnote 2, vol. 1, sec. 8.12 [B].

~4~blic ~w 94-450, SEX. 2, Oct. 4, 1984, 98 Stit. 1727.

.95s= 129 ConWssiona/ Rem~, s 9374 ( 1983) (Statement Of senator Thurmond).

w 17 U, S, C., SW. 10Wb)( 1) ( 1982 & Supp. V, 1987).
years. 87

While it appears that Congress intended to allow certain home audiotaping practices in

1971, the congressional reports accompanying the 1976 copyright revision were silent on

this issue. However, no report or statutory

language negated the principles stated in

1971.88 Currently, it appears that the 1971 legislative history may provide evidence of congressional intent to permit home taping of

music from broadcasts or prerecorded

sources. This issue is not positively determined by statute or case-law, however.

The Electronic Industries Association (EIA)

advances the position that language of the

1971 amendments clearly denied to copyright

owners the right to prevent home taping.89

Furthermore, the EIA believes that nothing in

the 1976 amendments to the copyright law negated the principle that home taping from

broadcasts or prerecorded materials was not

an infringement.90 EIA takes the position that

in view of the “clear Congressional intent to

exempt home taping from among the exclusive rights granted to copyright holders, we

submit that it is inappropriate to consider the

right of home taping strictly as a judicial derivative of the fair-use doctrine.”91 The EIA

summarized their opinion:

holder. Because home audio taping is

statutorily exempt from those exclusive

rights, the fair use issue, while theoretically

pertinent, should not ordinarily be implicated

in the context of home audio taping.92

In a sharply contrasting opinion, the Recording Industry Association of America, Inc.,

(RIAA) disregards the legislative history of

the 1971 amendments. RIAA asserts that the

legislative history was “made irrelevant b y

the subsequent overhaul of the copyright law

in 1976.”93 RIAA takes the approach that the

1971 legislation was intended to preserve the

status quo, pending a full revision of the law,

and that the enactment of the new copyright

law made the former legislative history irrelevant.

The home taping of records or other recordings that are borrowed from a public library

raises additional copyright considerations.

While the American copyright statute is very

explicit on the reproduction abilities of libraries and archives,94 there does not appear to be

specific statutory language dealing with the

home copying of audio works borrowed from

public libraries.

Another aspect of American copyright law

that deals with the copying of copyrighted

materials allows the copying of computer programs for certain purposes and under specific

8T.S$ Conwess, ~ri~ No. 92~7, op. cit., footnote 53, p. 7. The district court in the Sony decision relied on this rationale in

upholding the taping of broadcast material for home use. See, 4S0 F. Supp. 429, 444 (D.C. Cal. 1979).

~This issue was addressed by the district, court in the Sony case. See, 480 F. Supp. 429, 444-445 ( 1979). However, the Supreme

Court in the Sony decision did not analyze this issue.

MEM, op. cit., fmtnote z4, p. 3. The EIA asserts that section l(f) of the 1971 Act provided copyright holders the exclusive right to

reproduce and distribute sound recordings “to the public. “ “By limiting the right of copyright holders to reproduce and distribute

only as to the public, Congress thereby also denied copyright holders the right to preclude home taping for private use. ” Ibid.

‘Ibid. “It would be folly to presume that Congress would have made such sweepingchange totheexistingstate of the law, turning

millions of private citizens into lawbreakers, without explicit statutory language or legislative history. ”

“I bid., pp. 3-4.

‘21bid., p. 4.

9.3H. ~~n, op. cit., footnote 10, P. 2.

9417 U.s.c. 10s (1982).
ppgpy 

for a specific step in using the computer program or if the copy is for archival purposes.

Great Britain

Great Britain enacted a revised, comprehensive copyright act, the Copyright, Designs

and Patents Act 1988, on November 8, 1988.96

Most of the provisions of the Act became effective in the spring of 1989, and the Act repeals

and entirely replaces existing copyright legislation.

Several provisions of the new British Act

are of interest in the analysis of home taping.

The Act provides a sweeping definition of

“sound recording” that exceeds the American

concept of “sound recording”:

“sound recording” means —

(a) a recording of sounds, from which

the sounds may be reproduced, or

(b) a recording of the whole or any part

of a literary, dramatic or musical work,

from which sounds reproducing the

work or part maybe produced, regardless of the medium on which the recording is made or the method by which

the sounds are reproduced or

produced; ...97

Just as American law permits the copying

of certain computer programs, so does the

British law, but the British law has a far

broader application than the American law.

The American law is limited to computer software, while the British counterpart covers a

Works in electronic form

56.– (1) This section applies

where a copy

of a work in electronic form has been

purchased on terms which, expressly

or impliedly or by virtue of any rule of

law, allow the purchaser to copy the

work, or to adapt it or make copies of

an adaptation, in connection with his

use of it.

(2) If there are no express terms–

(a) prohibiting the transfer of the

copy by the purchaser, imposing obligations which continue after a transfer, prohibiting the assignment of

any licence or terminating any license

on a transfer, or

(b) providing for the terms on

which a transferee may do the things

which the purchaser was permitted to

do, anything which the purchaser was

allowed to do may also be done without infringement of copyright by a

transferee; but any copy, adaptation

or copy of an adaptation made by the

purchaser which is not also transferred shall be treated as an infringing copy for all purposes after the

transfer.

(3) The same applies where the

original purchased copy is no longer

usable and what is transferred is a

further copy use in its place.

(4) The above provisions also apply

on a subsequent transfer, with the

substitution for references in subsection (2) to the purchaser of references

to the subsequent transferor.98

=17 U.S,C. 117 (1982).

=%: Intel]~u~ Property Dept., Linklaters & Ptines, “Copyright, Designs and Patents Act 1988 1-2” (London: Linldaters &

Paines, 1988). This work is an analysis of the new British copyright law prepared bya British law firm for its international oflicesand

clients.

In addition to dealing with copyrights, the Act also includes provisions for the protection of design rights, and patents and trademarks.

97[(_Jreat Bri~in] Copyn’ght, &signs and Patents Act ( 1988), ch. 48, 5( l).

‘Ibid., sec. 56.
ppgp

these statutory provisions, a rental arrangement with the public is outlined. This section

also provides that the copyright in a computer

program is not infringed by the rental of copies to the public after the end of a period of 50

years from the end of the calendar year in

which the copies of it were initially issued to

the public in electronic form.100

The subject of time-shifting is dealt with directly in the Act.

The making for private and domestic use of

a recording of a broadcast or cable programme

solely for the purpose of enabling it to be

viewed or listened to at a more convenient

time does not infringe any copyright in the

broadcast or cable programme or in any work

included in it.101

Thus, the British law specifically exempts

time-shifting recording from the realm of infringement. In the United States, this practice

is embodied only in case-law, not statutory

law. The principle is further extended by the

provision that the free public showing or playing of a broadcast or cable programme is not

to be considered an infringement of copyright.

Certain condition and circumstances must,

however, be met for the viewing to be considered a free public showing.102

pyg

p

tory moral rights includes the right to be identified as the author or director of the work,104

the right to object to the derogatory treatment of the work,105 protection against false

attribution of works,106 and other factors.

Therefore, it appears that the new British

copyright law intends to respond comprehensively to recent technological advances and

problems that are created through the use of

such inventions.107

Canada

The Canadian copyright law has recently

undergone significant amendments,108 and

several provisions of the new law provide an

interesting contrast to American copyright

law. Canadian copyright law is of interest to

the United States, as both nations share a

heritage of the British common law tradition

and are North American neighbors, with an

overflow of broadcasting, popular culture,

and other common interests.

It appears that Canada does not have a

“home-use” exception embodied in its copyright statute. The Canadian statute describes

sound recordings as follows: “...copyright

‘gIbid., sec. 66.

loo~id., sec. 66.(5).

‘“’ Ibid., sec. 70.

‘“* Ibid., sec. 72.

‘031bid., ch. IV.

‘~Ibid., sec. 77.

‘‘sIbid., sec. 80.

‘

m

Ibid., sec. S4.

107AJthough the BrltiSh ~vernment consider~ a roy~ty ~yment on b]~k ~pes, it was not enacted as pm of the copyright reVision.

IM~: Cmada Gwette, Sta~&S of f&n~, lg~ (Ottowa, Cmada: Minister of supp]y wfices,sept. 1, 1988), chs. 13 to 19.
y y

be mechanically reproduced, in like manner

as if such contrivances were musical, literary

or dramatic works. ’’log The length of copyright protection for these works is ‘(fifty years

from the making of the original plate from

which the contrivance was directly or indirectly derived.... ”110

Several aspects of the 1988 Canadian copyright amendments are of interest. A computer

program is statutorily defined as “a set of instructions or statements, expressed, freed,

embodied or stored in any manner, that is to

be used directly or indirectly in a computer in

order to bring about a specific result.”111 The

law also permits the owner of a computer program to make a single reproduction of that

program for his own use. 112 The Canadian

amendments also recognize the moral rights

of the creators of artistic works and provide

protection for the injury to such rights.113

France

France has a very comprehensive copyright

law that differs markedly from the other laws

examined in this section. The statutory scope

of intellectual works covers a wide variety of

artistic works:

Article 3. The following shall in particular

be considered intellectual works within the

meaning of this law: books, pamphlets, and

other literary, artistic and scientific writings;

graphic works; circus acts and feats and pantomimes, the acting form of which is fixed in

writing or otherwise; musical compositions

with or without words; cinematographic

works and other works consisting of moving

sequences of images, with or without sound,

together referred to as audiovisual works;

works of drawing, painting, architecture,

sculpture, engraving, lithography; graphical

and typographical works; photographic works

and other works produced by techniques

analogous to photography; works of applied

art; illustrations; geographical maps; plans,

sketches, and plastic works, relative to geography, topography, architecture, or the sciences;

software,.... 114

This inclusive scope of intellectual property in

the French law appears to be one of the most

all-encompassing in the world.

Similarly, France has a very far-reaching

concept concerning the performance rights of

the author/copyright owner:

Article 27. Performance shall consist in the

communication of the work to the public by

any process whatsoever, particularly:

–public recitation, lyrical performance,

dramatic performance, public presentation,

public projection and transmission in a public

place of a telediffused work;

–by telediffusion

Teledifussion shall mean distribution by an

telecommunication process whatsoever of

sounds, images, documents, data and messages of any kind.

I o~anadian Copyright statute, ~, 4(3), from UNESCO and WIPO, Copyright LaWS and Treaties of the Wrjrld (Wnsh in@ on, ~:

Bureau of National MTairs, 1987).

‘ ‘“Ibid., sec. 10.

111 Canada Gazette, op. cit., footnote 110, sw. 1(3).

‘‘21bid., sec. 5.

1 I o~id., sees. 1, 12

I I d~w N. 57.~9~ [ France] (jn Lltemq un~ Artl.Stic PmPer@, Art. 3, from: UNESCO, Copyr-ght ~u’s and Treaties of the ‘orLd

( 1987).
of a loudspeaker or, as the case may be, by

means of a television screen placed in a public

place.115

This statute presents the novel concept of

“teledifussion,” which would apparently

cover the distribution of sounds through any

telecommunication process.

Like the American statute, the French copyright law distinguishes between the transfer

of personal and intellectual property: ‘(The incorporeal property ...shall be independent of

property rights in the material object. The

person who acquires this object shall not be

invested, by its acquisition, with any of the

rights provided by this law... ”l16

One of the most unique features of the

French copyright law is the great emphasis

placed on the rights of the creator and/or

copyright owner: the integrity of the creator’s

works and the protection of such creative efforts are of major importance.

Summary

While this section is not a comprehensive

analysis of international copyright law, several salient features of the various national

copyright systems have been examined. In the

United States the “first-sale” doctrine and the

rental record amendments illustrate how

American copyright law has developed and responded to particular circumstances and

needs. In Great Britain the new copyright law

also responded to changes in society and technology. Although the Canadian copyright law

is less comprehensive than the other statutes

pp

the world. Its scope of coverage is very broad

and it is deferential to the rights of creative

artists.

CHANGES TO TRADITIONAL

AMERICAN COPYRIGHT

CONCEPTS

International Protection of

American Intellectual Property

Concurrent with the rapid technological developments in the audio recording and reproduction industry, there has been a growing

concern regarding the international protection of American intellectual property. Two

forces have given rise to this concerns: the

ability to produce high-quality copies of copyrighted works easily and inexpensively, and

the resulting possibility of “piracy” of copyrighted works – the reproduction, manufacture, and sale of copy-righted works without

the permission of the copyright owner.

At the present time there exists no uniform

international or universal copy-right concept

that would ensure the protection of an

author’s works on a global basis. An author’s

protection for the unapproved use of his

works in a foreign country usually is based on

that country’s laws. Many foreign nations provide copyright protection for works created by

foreigners through terms set by various international copyright agreements. Protection for

American authors may exist through bilateral

or multinational treaties. The United States is

a member of the two principal multinational

1 l~~id., title II, art. 27.

1‘eIbid., art. 29.
y 

Artistic Works (“Berne Convention’’).118

Before Congress enacted legislation that enabled the United States to adhere to the Berne

Convention in 1988, the UCC provided the

broadest international protection available to

American copyright holders.119 Many countries belong to both the UCC and the Berne

Convention. The UCC standards, however,

are not considered to be so stringent as the

Berne Convention’s, and commentators believe that the UCC is less effective in preventing copyright violations.120 Under the UCC,

works by an author who is a national or a

domiciliary of a UCC member country are eligible for UCC protection. Any author, irrespective of nationality or domiciliary, whose

work was first published in a country covered

by the UCC, may claim protection under the

UCC. Thus, under the UCC, works by Americans and works first published in the United

States would at least be given the same copyright protection as that accorded to the works

of the foreign country’s nationals for works

first published in that foreign country. This

copyright treatment is usually called “na

ments are met.

In addition to the UCC, the United States

has entered into other bilateral copyright

treaties or accords with countries that belong

to neither the Berne Convention nor the UCC.

In recent years the United States signed treaties with certain nations where alleged copyright “piracy” had occurred. Among these

bilateral copyright treaty countries are Thailand, Taiwan, Singapore, and South Korea.

The most recent development for the international protection of American intellectual

property has been United States adherence to

the Berne Convention. On March 1, 1989, the

United States, formally became a party to the

Berne Convention, which has been in existence since 1886. The decision was made only

after extensive congressional consideration of

the implications of membership.122 On March

1, 1989, certain copyright amendments went

into force that brought American copyright

law into compliance with Berne Convention

obligations. l23 From March 1, 1989, onward,

copyrights in the works of American authors

will receive copyright protection by all of the

I I T’1’he Univerd Copyright Convention consists of two acts, one signed in Geneva in 1952 ~d another signed in Paris in 1971. The

United States ratified both agreements. See: Nimmer, op. cit., footnote 2, vol. 1, sec. 17.04 [B].

1 la~rne Convention Imp}ementition Act of 1988, Public Law 1OO-568, Oct. 31, 1988, 102 Stit. 2853.

11 Whe UCC is administered by the United Nations Educational, Scientific, and Cultural Organization WNESCO). This accord was

established for the purpose of providing an international copyright protection network suitable for the participation of the United

States.

1%ee: Harrison Donnelly, “Artists’ Rights and Copyrights, ” Congressional Quarterly’s Editorial Reseamh Reports, May 13, 1988,

pp. 246, 248.

121~, Nimmer, op. cit., footnote 2, vO]. 1, sec. 17.04[BI.

lzzIn the l~h ConWess, five bi]]s were introduced and considered concerning the adherence of the United Shtes to the Berne

Convention: H.R. 1623, H.R. 2962, H.R. 4262, S. 1301, and S. 1971. The Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Judiciary Committee held hearings on H.R. 1623. The House Judiciary Committee prepared a report on

H.R. 4262 (H.R. Rep. No. 100-609). H.R. 4262 was the bill that was enacted into law. The Senate Subcommittee on Patents, Copyrights, and Trademarks of the Senate Judiciary Committee held hearings on S. 1301 and on S. 1971 and prepared a report on S. 1301

(S.ReP. No. 100352).

1 zs~ ~b]ic ~w 1~568, o~. 31, 1988, 102 Stat. 2853. bong the Chmges brought abut by the United States’ adherence to the

Berne Convention were: changes in the formalities of copyright registration, inclusion of architectural plans within the scope of

copyright coverage; matters dealing with jukebox licenses, and other areas. A specific provision of the law expressly excludes recognition of the concept of artists’ or moral rights. See discussion below.
member nations as their own nationals for the

purposes of copyright protection. Thus, under

certain instances, American authors may receive higher levels of protection than the guaranteed minimum. Also, works of foreign

authors who are nationals of a Berne Convention country and whose works are first published in a Berne Convention country will receive automatic copyright protection in the

United States.

The primary purpose of these international

accords is to provide copyright protection for

American nationals in foreign countries.

While the exact terms of the accords vary, the

basic intent and fundamental treaty provisions are similar. Until fairly recently, the

United States was ambivalent about adhereing to the Berne Convention. A primary reason for negotiating the UCC was to provide

“Berne-like” protection for American nationals, and many of the negotiators of the UCC

saw it as a “bridge’) to adhering to the Berne

Convention. 124 The provisions of the UCC and

the Berne Convention are similar; however

differences exist. Notably, the Berne Convention has no formal notice requirements for

copyright registration and the Berne Convention recognizes the moral rights of artists.

Some commentators believe that the primary

difference between the two accords was the

notice of registration requirement.125

Several strong arguments were advanced

for the United States adhering to the Berne

leadership role, which has been limited since

the American withdrawal from UNESCO–

the administering body of the UCC –in 1984.

Another important reason advanced for Berne

Convention adherence was that 24 nations

who are not members of the UCC were members of the Berne Convention, and greater protection to American copyright holders would

be extended through Berne membership. Arguably, American adherence to the Berne

Convention would result in the Berne Convention itself gaining strength and becoming a

more dynamic international force in the

realm of copyright protection.127

Artists’ Rights

Although the concept of artists’ rights is beyond the scope of this OTA study, it is a current issue of concern in the field of American

copyright law and will be briefly summarized.

The Anglo-American common law copyright

tradition did not recognize certain ‘(moral” or

artists) creative rights in their artistic creations. Thus, protection for artists’ works was

achieved primarily through bargaining and

negotiation with publishers, purchasers, and

other buyers of works. Hence, under common

law, when ownership of the objector the copyright passed from the creator to the buyer,

creative or artistic rights usually passed on to

the purchaser.128 In the United States, where

there was no strong tradition of public support for the arts, there has not been strong

IZ4W. W]en Wa]]is, “International Prot=tion of U.S. Copyrights, ” Department of State Bulletin, October 1987, p. 26.

Izswi]]im s. Strong, The ~oWrig~~ fi~: A 1%-rxtwcd Guide (Cambridge, m: MIT press, 1981), P. 166.

Ize~: Wd]is, op. cit., footnote 124, P. 28.

T ZT~ld. w~W: U.S. Conwess, The &rne Contention, Hearings before the Subcommittee on Patents, Copyrights and Trademarks of the Senate Committee on the Judiciary, lot)th Cong., 2d sess, ( 1988), pp. 5961.

~ Zaln contrast s= the di~ssion of the “first-sale” doctrine above.
considered more important, different legal

concepts developed. Thus, in some European

countries a major goal of copyright laws is to

protect the connection between the artist and

his work. This right of “paternity” recognizes

the author’s creation of the work. Certain

European nations also recognize laws prohibiting the change, ‘mutilation,” or alteration

of artists’ works. These artists’ rights were

first recognized by the Berne Convention in

1928.

Consideration of artists’ rights or moral

rights has become an issue in the United

States. In the 100th Congress, bills were introduced130 and were seriously analyzed and debated. 131 A closely related issue to the traditional concept of artists’ or moral rights is the

recent technological development of motion

picture “colonization.” Through various electronic means, color is added to copies of motion pictures that were originally produced in

black and white. Currently, moral rights of

In adhering to the Berne Convention, the

United States specifically did not agree to the

Berne Convention’s provisions for moral/artists’ rights. As the Berne Convention Implementation Act provided:

(b) CERTAIN RIGHTS NOT AFFECTED. –

The provisions of the Berne Convention, the

adherence of the United States thereto, and

satisfaction of United States obligations

thereunder, do not expand or reduce any right

of an author of a work, whether claimed under

Federal, State, or the common law–

(1) to claim authorship of the work; or

(2) to object to any distortion, mutilation, or

other modification of, or other derogatory action in relation to, the work, that would prejudice the author’s honor or reputation.132

Thus, although the issue of artists’/moral

rights has been of considerable legislative, political, and societal concern in the United

States, no major legislation addressing it has

been enacted.

129N~d1ne Coh{xjas, “Berne-Convention Bill Approved,” Congressional Quarterly, Apr. 16, 1988, pp. 1028, 1028-1029.

13~W{) pi~es of C[)mpanion ]e@S]atic)n were introduce] in the 100th Congress concerning artists’ rights: H.R. ~~22 1 tinfl S 16 lg.

The House Sutxommitt L* on Courts, Civil Liberties and the Administration of Justice of the House Judiciary Commit t ee hel(l hearings on H. R. 3221 The Subcom mittee on Patents, Copyrights and Trademarks of the Senate Judiciary Comm lttee held hmirings on S.

161!). Although neither hill was enacted, negotiations and deliberations were in progress at the close of the IOOth Congress, tind this

legislation had proceeded farther in the legislative process than prior legislation concerning artists’ rights. At the time oft h is writing, legislation has not yet been introduced in the 101st Congress concerning artists’ rights.

131 w for ins~ce U.S. Conwess, Vlsuu/ Artlsls Rights Act of 1987, Hearings before the Subcommittee on Patents, copyrights tind

Tradem&ks of the Senate Committee on the Judiciary, IOOth Cong., 1st sess. ( 1987).

I qzfiblic ~w 100-568,” 102 s~t. 2&53, Oct. 31, 1988, sec. ~(b).
Chapter 4

An Overview of the

US. Recording Industry
Page

THE GROWTH IN THE U.S. RECORDING INDUSTRY . . . . . . . . . . . . . . . . 91

RECORDING COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Record Company Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

Differences Between Majors and Independents . . . . . . . . . . . . . . . . . . . . . . 94

Distribution ..*. .o*OO** 0**. o*. o*. .**o. ... .**o*. ... ooo*. ... oo. . 95

Retail Sales **. ..** .*. .*, *.** *. *em*.***..**.**.. .** ***..*. . 96

RECORDING CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Types of Recording Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Contract Provisions . . . . . . ● ... *o** *oooo*o **** *. * * * * o * *, **.*,..*. 98

Tables

Table Page

4-1. Annual Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
THE GROWTH IN THE

U.S. RECORDING INDUSTRY

The U.S. recording industry is a multibillion-dollar industry that has experienced a cyclical series of gains and losses (table 4-1). For

the past several years, however, the recording

industry has been experiencing an increase in

revenues: the industry’s dollar volume in 1987

was $5.57 billion in manufacturers) shipments (based on the suggested list price), an

increase of 19.7 percent over 1986 figures,l

and the 1988 volume was a record $6.25 billion, a 12.2-percent increase over 1987. 2 The

number of records, tapes, and CDs shipped,

net after returns from retailers, increased 8

percent to reach an all-time high of 761.9 million

3 (table 4-l). The Harry Fox Agency, the

music licensing agency, reports that 65,525 licenses were issued in 1988, a 13.6-percent increase over 1987. Of these, 25,380 (38.7 percent) were first-time licensed songs, compared

with 15,088 first-time licenses in 1987.4

Although revenues for the recording industry are expected to grow at an average annual

rate of about 6 percent through 1993,5 industry spokesmen are adamant that current

growth does not indicate that the effects of

home audiotaping are negligible. On the contrary, they assert that revenue growth would

g, 

audiotaping. 6

A large part of the recent increase in revenues can be attributed to the introduction of

several new formats, especially compact discs

(CDs). Introduced in 1983, CDs accounted for

a third of the industry’s total dollar volume in

1988 (table 4-l). Sales of cassette singles

reached $57.3 million since their introduction

in 1987, and sales of yet another new format,

the 3-inch CD single amounted to nearly $9.8

million (table 4-l).

Meanwhile, the proliferation of portable

cassette players, Walkman-type stereos,

audiocassette decks, etc., has increased the

popularity of cassettes, which are now the predominant format or “carrier” for prerecorded

music. Cassette sales accounted for 54 percent

of all dollars spent on prerecorded music for

1988, while unit sales increased 10 percent in

1988 to a value of $3.38 billion7 (table 4-l).

The sales value of LPs declined to $532.3

million, continuing a decline that began in

1980. Unit sales of disk singles also declined

11 percent in 1988 (table 4-l).

RECORDING COMPANIES8

The U.S. recording industry has six dominant record companies (the “majors”), each

with several affiliated labels. They are:

‘ FUAA Market, Research Committee, Recording Industry Association of America, Inc., 1989.

ZH. ~=n, IL@ ]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drafl ch. 3, p. 1.

3WM~ket ~search Committm, Recording Industry Association of America, Inc., 1989.

‘Edward P. Murphy, President, National Music Publishers’ Association, Inc. and the I-Larry Fox Agency, Inc., letter to OTA, Feb. 28,

1989,

su s ~W~ment of Commerce, U.S. Industrial Out fook, 1989, p. 57-4. .

‘U.S. Congress, Senate Judiciary Committee, Video and Audio Home Taping, hearings before the Subcommittee on Patents, Copyrights, and Trademarks, Serial No. J-98-75, Oct. 25, 19&3; and U.S. Congress, Senate Judiciary Committee, Home Audio Reco&ingAct,

hearings before the Subcommittee on Patents, Copyrights and Trademarks, Serial No. J-99-69, Oct. 30,1985, Mar. 25 and Aug. 4,1986.

‘H. Rosen, RIAA, letter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 3, p. 2.

f3The fo]]o~ng is a ~ner~ Ovemiew of the us, r=orr] industv, ~d is in no way me~t to & a comprehensive discussion Of how

recording companies function. It is not an attempt t,o fully explain all aspects of the recording industry, but rather highlights some of

the major characteristics and distinctions of its operation.

91

2.

3.

4.

5.

6.

Warner Communications, Inc., which

owns, among others, Warner Brothers,

Elektra/Asylum/Nonesuch Records, and

Atlantic Records;

RCA Records Group, which along with

Arista is a subsidiary of Bertelsmann

Music Group (BMG) of West Germany,

Capitol Industries-EMI, Inc., which

owns Capitol Records, EMI America, Angel, Manhattan, and Blue Note labels;

MCA, Inc.; and

Polygram, which includes the Mercury,

Polydor, Phillips, London, and Deutsche

Gramophone labels.

For the most part, the majors have historically grown in size by the acquisition of

smaller competitors.9 For example, each of

the affiliated labels of Warner Communications, Inc., was at one time an independent

company, and MCA, Inc., just recently acquired Motown records.

The major recording companies have experienced tremendous growth over the current

y

its highest operating income in the first half of

1988, netting $143 million.11 MCA, Inc., hit an

all-time high mark of $41 million in 1987, a

21-percent increase over the previous year.12

Currently, there are two large independent

recording companies, A&M, which contracts

with BMG for its manufacturing and distribution, and Chrysalis, which contracts with

CBS. Motown Records, previously another

large independent company, was recently sold

to MCA which had handled its manufacturing and distribution, and to MCA'S investment partner, Boston Ventures, for $61 million. 13 These large independent labels have

maintained at least 1 percent of the market

share over a period of years, and with the exception of distribution, they perform all of the

functions of a major recording company.14

There are numerous other independent labels. MTS, Inc., the company that runs Tower

Records, for example, carries over 2,600 listings of independent labels.15 These firms vary

in size from A&M and Chrysalis to a label

owned by just one artist.16 Most are small

firms that in the aggregate maintain a market

share of less than 1 percent.17

9David E. ~onemyer ~d J, GreWV Sidd, “The Structure and Performance of the U.S. Record Industry, ” 1986 Entertainment,

Publishingund the Arts Handbook, by John David Viera and Robert Thorne (eds.) (New York, NY: Clark Boardman Co. Ltd., 1986), p.

266.

IODavid L1e~rmm, ~~Now P]afing: The ~und of Money: The word Industry’s P]atinum Success IS Spawning Multimedia Empires,” Business Week, No. 306586-90, Aug. 15, 198S, pp. 86-87.

1 I Mark Meh]er, IIWCI Music Nets $143 Mi] Income in Record 1st ~f, ” Bill~ti, VO]. 100, No. s 1, Ju]y so, 1988, p. b.

‘2Lieberman, op. cit., footnote 10, p. 86.

I a%&fwk potts, (l&aPfine~s Right: MotOwn ~]d: & Rumor~, M(_JA Inc. TO Buy Record Compny, ” The Washington Post, June

29, 1988, pp. G8G9.

14Un1t~ Stites of ~erica ~fore F~er~ Trade Commission, Docket No. 9174, In the matter of Warner Communications, Inc.,

Warner Bros. Records, Inc., Chappell & Co., Inc., and Polygram Records, Inc., Trial BriefofCounsel Supporting the Complaint, Aug. 17,

1987, p. 9.

15Russe]] M. ~lomon, president, Tower Records, letter to OTA, May 2> 1989.

‘Wronernyer and Sidak, op. cit., footnote 9, p. 270; FTC hearings, op. cit., footnote 14, pp. 8-9.

“FTC hearings, op. cit., footnote 14, pp. 8-9.
The production and sale of prerecorded mu

sic in the United States comprise three major

functions: production, manufacturing, and

distribution. Production entails selecting and

recruiting artists and material for the artist to

record, securing the arrangement, financially

managing the recording, and recording the

material. Manufacturing involves reproducing and packaging the recordings onto cassettes, LPs, singles, CDs, etc. Distribution includes marketing, advertising, promotion,

and the orderly release of the product, as well

as managing sales, inventory, collection, and

wholesale pricing.18 While exact data were not

available to OTA, interviews with recording

company executives suggest that manufacturing, packaging, and royalty costs are about

$2.50 to $2.75 for a typical LP/cassette, and

$3.50 to $4.00 for CDs. Of the wholesale price

(approximately $5.00 for an LP or cassette),

perhaps $1.00 will go to the artist and another

$0.55 will go to the music publisher and songwriter.19

Differences Between Majors and

Independents

Whereas all of the major labels are typically

minor subsidiaries of diversified corpora

jp

differ from the independents in that they are

vertically integrated into the production and

distribution of prerecorded music on a national or international scale.22 Thus, they can

produce, manufacture, and distribute their

products. Independents, on the other hand, do

not have this capacity, and must either subcontract with a major recording company or

rely on an independent firm to manufacture

and distribute their products. Independent

distributors are limited to distributing products on a regional basis.23

Subcontracting arrangements can be beneficial to the majors as well as the independents.24 Major recording companies have developed extensive manufacturing and

distribution networks to take advantage of

large economies of scale. These networks require an adequate flow of sound recordings to

operate at optimal efficiency. The WEA (Warner/Elektra/Asylum) distribution network,

for example, employs over 1,000 people in

four regional distribution centers, and in

1987, it tracked over 1,500 line items.25 By

subcontracting its facilities to independents,

the majors are able to operate at maximum efficiency, and, in return, the independents are

able to price their products competitively.26

‘

e

Ibid., p. 7.

IgOTAs~ inte~ew with r~ord company executive, June 22, 1988; H. Rosen, R.I.AA, letter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 3, p. 8.

~fionemyer and Sidak, op. cit., footnote 9, p. 267.

21 Dick Weissmm, “Record companies,” The Musk Business: Career Opportunities and SeifiDefense (New York, NY: Crown Publishers, Inc., 1979), p. 36.

ZZFTC hearin~, op. cit., footnote 14, P. 8.

z31bid., p. 8.

z4The fo]]o~ng is ~en from Kronemyer and Sidak, op. cit., footnote 9, p. 2?0.

250TA sw inteMew with WEA executive, June 22, 1988.

ze~onemyer and Sidak, op. cit., footnote 9, p. 270.
jpg

over independents in manufacturing and distribution since they can more closely coordinate the release of the product with marketing, promotion, and sales efforts.

28 T h e

independents can, however, incur lower fixed

costs of manufacturing and distribution by

subcontracting with the majors. Overall

manufacturing and distribution costs are

higher for major record companies, although

the majority of the costs associated with recording music (i. e., studio time, producers’

fees, musicians, etc.) remain the same regardless of the size of the recording company.29

Because of their stature,30 and their ability

to offer large bonuses and increased royalty

rates, the majors are more able to attract wellestablished artists than are independents. A

major label may also better be able to afford

to risk a venture on new talent, and, in fact,

may view its future in that market. 31 A l -

though many new acts get their first “break”

by signing with an independent recording

company, the Recording Industry Association

of America (RIAA) reports that the major distributors sell most of the new talent on the

market and that the vast majority of records

released by the major distributors are not by

the proven successes.sp Sales from a few new

talents may represent huge profits for record

companies, since new artists rarely receive the

sent a substantial loss for a record company

since most new recordings fail to make a

profit.

Distribution

Distribution involves the sale of the product to retailers, wholesalers, subdistributors,

and sometimes, directly to the consumers. It

also involves warehousing and inventory control, and tracking of consumer buying habits.

Music is “perishable” in the sense that sales

depend on closely coordinating advertising,

marketing, promotion, and pricing. The bulk

of a recording’s sales are generated during the

short time in which it is a “hit.” Thus, it is

critical that an adequate supply of the product be available when demand peaks.33

The majors distribute over 83 percent of the

recording industry’s total volume,34 approximately 10 percent of which is for independent

labels. 35 With the exception of recordings the

artist sells in conjunction with performances,

independent distributors account for the remaining 17 percent. Independent distributors

operate regionally in the United States. Most

carry products from some of the larger independent labels, in addition to a large number

from the smaller ones.

2TThe fo]]owlng is ~ken from Kronemyer and Sidak, op. cit., fcx]tnote 9, pp. 267-270.

2aIhid., p. 270.

2gIbid.

30~c heuinw, Op. cit., footnote 14, p. 10

31 H. ~Sen, ~, letter t[j J. Winston, OTA, May ~, lf)~~, Enc]osllre with c~mments on draft ch ~~, p. 7

321bid.

sa~c hearinW, op. cit., fOOt,note 14, p. 14.

341bid., p. 52.

351bid,, p. 19.
distribute their recordings outside of the

United States and earn as much as half of

their revenue from foreign sales. Foreign markets provide a greater opportunity for recording companies to spread their initial production costs and generate higher revenues.36

Retail Sales37

Record stores are responsible for over 60

percent in dollar volume sales of prerecorded

music. Large-scale outlets are supplied directly by the recording companies; smaller operations purchase their merchandise at a

slight markup from subdistributors, known

as “one-stops.” One-stops stock products

from a wide range of labels, especially those of

the major recording companies. One-stops offer record retailers the convenience of purchasing most, if not all, of their music from

one source. Some one-stops specialize in one

particular type of music; others carry a wide

range of selections.

Mass merchandisers, such as department

and discount stores, sell a high volume of

prerecorded music, particularly hit records.

Most mass merchandisers do not buy directly

from the recording company, but rather enlist

the services of a “rack jobber” to supply their

music. Rack jobbers carry a narrow selection

cases the rack jobber actually leases the space

in the department or discount store and owns

as well as operates the record department.38

Recording companies also sell their product

directly to the consumer via direct mail. Currently, there are two record clubs operated by

the major recording companies:39 the Columbia Record Club, part of Columbia House, a

division of CBS, Inc., which distributes music

from all the major labels with the exception of

RCA; and RCA which distributes its music

along with the products of other companies

such as A&M, Arista, Capitol, Mercury, and

London.40 Smaller recording companies also

operate their own mail order systems, but offer a narrower selection.

RECORDING CONTRACTS

Types of Recording Contracts

Crucial to the recording business are the

contracts that define the business arrangements underlying record production and the

allocation of revenues from the recorded material. Although there is no one standard recording contract today, recording agreements

tend to be negotiated within one of four categories: 41 the exclusive artist recording contract, the “all-in” artist contract, the producWbid., pp. 30-31.

sTThe fo]]ofingis ~en from material incorporated in the FTC hearin~; Dick Weissman, “HowRecords Are Sold and Distributed,”

TheMusicBusiness: Canwr Opportunities and SelfDefense (New York, NY: Crown Publishers, Inc., 1979), pp. 60-67, and Adam White

(&.), InSi&~he RemdingInduStT: An IntmduCtion toherim’SMuSicBuSineSS (Washington, DC: Recording Industry Association of

America, 1988).

38weissm~, op. cit., footnote 37, P. 62.

39H. ~=n, FUAA, ]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 3, p. 12.

4%idney Shemel and M. William Krasilovsky, This Business ofMusic (New York, NY: Billboard Publications, 1985), with 1987 update, p. 56.

41 The fo]]o~ng is inmrpra~ from AmH. ~mser ~d Fr~ E. ~ldring, “current Trends in kord Deals, ” l!?&?4 Entertainment,

Publishing, andtheArts Handbook, Michael Myer and John David Viera (eds.) (New York, NY: Clark Boardman Co. Ltd., 1984), pp.

168- 169; Shemel and Krasilovsky, op. cit., footnote 40, p. 47; I%rold Vogel, “The Music Business, ” Entertainment Industry Economics:

A Guide For Financia/%alysis (New York, NY: Cambridge University Press, 1986), p. 145; and H. Rosen, RLA.A, letter to J. Winston,

OT~ May 2, 1989 (enclosure with comments on draft ch. 3, pp. 12-16).
Photo Credit: Ed Asmus, Courtesy of MTS, Inc.

Cassettes have become the most popular audio format.

tion contract, or the master purchase o r

master license contract. Under the exclusive

artist recording contract, the recording company signs the artist directly to the label, and

an in-house or independent producer is assigned to guide the project. Under an “all-in”

artist contract, the recording company contracts directly with the artist, who furnishes

his own independent producer. The artist is

paid a lump sum, and then must pay the producer and other costs.42 Under the production

contract, 43 the recording company contracts

with an independent production company

representing the artist. The production company need not be a music producer per se, and

in some cases may simply be the artist’s manager.44 Under the master purchase or master license contract, the artist provides finished

42H. Rosen, RIAA, letter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 3, p. 13.

4aFor a more dehi]~ dixussion of production contracts, see Bomser and Goldring, op. cit., fOOtnOte 41, PP. 168-169.

44H. ~sen, RH, ]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drti ch. 3, P. 12.
g py

Within these categories, specific contract

provisions are based on negotiations between

the recording company and the individual artist or the production company representing

him. These provisions may be contingent on

the relative bargaining power of the recording

artist – i.e., whether he is a new or well-established artist.

Contract Provisions

Length of Contract

In the past, a recording artist’s contract

typically ran for 1 year, with the recording

company having the option to extend the contract period for up to four additional l-year

periods. Now, however, recording contracts

usually specify the number of albums to be

delivered, with options for an additional number of albums to be delivered in the future.@

During this contract period, the artist is obligated to record exclusively for that recording

company. This provision protects the recording company from having its artist start recording for another company after the original company has invested a great deal of time

and money in developing that artist’s career.47

Although the contracts usually bind the record company to record the artist, they do not

require that the recordings actually be released. Contract negotiations might stipulate

that the artist is free of contractual obliga

Other issues that the artist and the production company or recording company negotiate

include default clauses, conditions under

which a contract can be reassigned to another

person or company, foreign release commitments, ownership of publishing rights, and

the artist’s right to audit the recording company’s books.48

Ownership and Use of Masters49

Since a recording agreement is a contract

for employment between the recording artist

and the recording company, the company

owns the recorded product as a “work-madefor-hire” under the U.S. copyright laws, unless otherwise provided.50 Contract negotiations determine whether the masters and the

copyrights of the sound recording would revert to the artist after a certain period. Most

contracts also contain language addressing release, remastering, reissues, etc.

Recording Costs and Advances

In the United States, as in all countries but

France,51 all costs of recording and producing

a musical work are recoupable out of an artist’s royalties. It can cost from $100,000 to

$500,000 or more to record and produce an album.52 The initial investment for a new artist

is usually over $200,000, excluding the costs of

marketing, advertising, and producing a pro45~mser ~d ~]dring, op, cit., footnote 41, p. 168; Vogel, Op. Cit., footnote 41, P. 145.

46~m~er ~d @]dring, op. cit., footnote q 1, P. 172.

4TSheme] ~d fiasi]ovsky, op. cit., footnote 40, p. 10.

4EIVOP1, op. cit., footnote 41, pp. 15~-154.

4gMaterial taken from Bomser and Goldring, op. cit., footnote 41, p. 172; Shemel and Krasilovsky, op. cit., footnote 40, pp. 12-13.

~~mser & ~]dring, op. cit., f~tnote 41, p. 172; Shemel ~d Krasilovsky, W. cit., footnote 40) P. 12.

S1 H, ~wn,~]etter t. J. Winston, OTA, May 2, 1989. Enc]osure with comments on drafl ch. 3, p. 18.

52H. ~sen,~, ]etter t. J Winston, OTA, May 2, 1989. Enc]osure with comments on drafl Ch. 3, p. 18.
Mastering room

motional video. Music videos have production

costs of approximately $50,000 to $80,000 for

new artists, and around $130,000 to $250,000

or more53 for well-established artists. Overall,

the costs of recording, manufacturing, advertising, producing a video, and promoting an

album can run anywhere from $300,000 to

$750,000 or more.54

The artist does not normally receive income

from the sale of his recordings until all recording and some other costs are recovered.55

Therefore, an artist, especially one who is just

beginning, may need financial assistance to

cover expenses. The recording company will

often advance payments to the artist to assist

with initial expenses. The size of an advance

varies with each artist and each situation. In

principle, these advances are recoupable from

future royalties, but according to RIAA, artists are seldom forced to repay the advance if a

53H. ~sen, I/MA, letterto J. Winston, OTA, May 2, 1989. Enclosure with comments on drall ch. 3, p. 19.

54H. ~Wn, R~, letter t. J, Winston, OTA, May 2, 1989. Enc]osure with comments on draft ch. ~, p. 18.

551n addition t. rwordingcosts, the rworr] company may be able to r~over ~la] ~work, promotion], packaging, and/or advertising fees.
industry estimates that 85 percent of all pop

albums and 95 percent of all classical titles fail

to recover their costs.57

In addition, some contracts may allow the

recording company to recover its costs for all

prior recordings made by the artist. In other

had been unable to recoup costs, the company

might be able to recoup all losses before paying out any of the royalties made from the last

and only successful album. Whether this is the

case depends on contract negotiations and the

relative bargaining power of the artist; according to the RIAA it seldom occurs.58 

WH. ~wn, RIAA, ]et~r to J. Winston, OT~ May 2, 1989. Enclosure with comments on draft ch. 3, p. 20.

S7white, op. cit., fOOtnOte 37, P. 35’

S8M. cover, hording Indu@V ~=iation of ~erim,te]ephone ~nver~tionwith D. Wong, OT~ May 11, 1989.
Chapter 5

Copyright Royalties for

Music and Sound Recordings
Page

ROYALTIES FROM THE SALE OF RECORDINGS . . . . . . . . . . . . . . . . . . . . 103

Recording Contracts and Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Recording Contracts. ...o. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Royalty Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Royalties From the Sale of CDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

ROYALTIES FROM MUSIC USED IN RECORDINGS . . . . . . . . . . . . . . . . . . 109

Compulsory Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Mechanical Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Harry Fox Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

ROYALTIES FROM THE PERFORMANCE OF RECORDED MUSIC . . . . . 111

Performing Rights Societies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Songwriter Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Copyright Royalty Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

PERFORMANCE RIGHTS IN SOUND RECORDINGS . . . . . . . . . . . . . . . . . 117

Performance Rights Under U.S. Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

Arguments for and Against Performance Rights . . . . . . . . . . . . . . . . . . . . 119

ROYALTIES FROM HOME TAPING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Proposals for a Home-Taping Levy in the United States . . . . . . . . . . . . . . 120

International Perspectives on Tape Levies . . . . . . . . . . . . . . . . . . . . . . . . . 120

5-A

5-B.

5-c.

5-D.

5-E.

Table

5-1.

5-2.

5-3.

Boxe s

Page

Performing Rights Societies: Logging Procedures . . . . . . . . . . . . . . . . . . 116

Performing Rights Societies: Distribution of Royalties to Members . . . 118

How Performance Royalties Are Distributed in Other Countries . . . . . 121

Copyright Clearance Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Details of Proposed Blank-Tape Levy in S.1739 . . . . . . . . . . . . . . . . . . . 124

Tables

Page

Private Copying Royalties - Legislation and Implementation . . . . . . . . 132

Taxation on Private Copying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Private Copying Royalties - Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 134
A royalty is a payment made to a copyright

owner or performer for the use of his property. It maybe based on an agreed-on percentage of the income arising from the use of the

property or on some other measure. This

chapter describes the different systems that

have been devised or proposed to collect and

distribute royalty payments to copyright

owners and performers.

The first section addresses how recording

companies pay royalties to performers.

The second section discusses how copy-right

owners of musical works (e.g. songwriters,

publishers) collect royalties on “compulsory”

and “mechanical” licenses granted to the

companies that make recordings of their music. It also examines how these copyright owners receive royalties from public performances of their recorded music.

Various performing rights organizations

collect and distribute royalties. The third section describes these organizations and the

mechanisms they use to provide these services.

In the United States, copyright owners of

sound recordings (e.g., record companies, performers) do not have the right to be compensated for public performances of their work.

The fourth section discusses the arguments

for and against providing compensation to

copyright owners in sound recordings.

As home copying has become more prevalent, there have been proposals in the United

States to place a fee on blank tapes or record

ing equipment to compensate composers,

authors, musicians, artists, recording companies, and producers or production companies

for private copying. The final section provides

a detailed discussion of one proposed blanktape levy scheme and the proposed system for

allocating the royalties it would generate. In

addition, the final section overviews tape-levy

schemes either proposed or implemented in

France, Australia, Belgium, the United Kingdom, Hungary, Iceland, West Germany, and

Sweden. Tape-levy schemes for Austria, Finland, Portugal, Spain, and Norway are also

considered.

ROYALTIES FROM THE SALE

OF RECORDINGS

Recording artists are compensated in three

ways for their services. First, they are paid union scale for their performances as determined, for vocalists by the American Federation of Television and Radio Artists (AFTRA)

and, for instrumentalists by the American

Federation of Musicians (AFM). Rates for feature artists are negotiable; backups are covered by labor agreements.2 Second, artists are

eligible to receive a share of the royalties from

the sale of the recording. This share is determined by the contractual agreement negotiated either between the artist and the recording company or the artist and his or her

producer, depending on the type of contracts

Third, artists receive advances, ranging from

‘Material for this section is incorporated from: Alan H. Bomser and Fred E. Goldring, “Current Trends in Record Deals, ” 1984

Entertainment, Publishing, and the Arts Handbook, Michael Myer and John David Viera (eds.) (New York, NY: Clark Board man Company, Ltd., 1984), pp. 167-173; Sidney Shemel and M. William KrasiloVsky, This Business ofMusic (New York, NY: Billboard Publications, 1985) (with 1987 update) ;Alan Siegal, “(Si Si)Je Suis un ~kSt~,’’B~hingin to the~usic Business (port Chester, NY: Cherry

Lane Books, 19S6), pp. 89-133; Harold Vogel, “The Music Business,” Entertainment Industry Economics: A Guide for Financial Analysis (New York, NY: Cambridge University Press, 1986), pp. 131- 157; Dick Weissman, “Record Company Contratis, ” The Music ~ustness: Career Opportunities and Self-Defense (New York, NY: Crown Publishers, Inc. 1979), pp. sz-~g; Adam white (~.), lnsi~ the

Recoding Industry. -An Introduction toherlm’.v Mutsic Businevs (Washington, DC: Record ingIndustry Association of America, 1988);

and interviews with record company executives.

ZJ. ~]~ner, ~rson~ communication, advisory panel meeting at OTA, Apr. 2A, 1989.

3

See ch. 4 for a more detailed description of recording contracts.

103
penses. 

These advances are, however, recoup

able from the artists’ future earnings.

Recording Contracts and Royalties

The four general types of recording contracts typically used in negotiations, either between the artist and the recording company or

the artist and the producer, are conventions

agreed to by both parties before work commences on a particular albums The artist’s

bargaining power may be contingent on such

factors as whether he is a beginning artist or a

superstar. Each type of contract stipulates

what requirements each party must fulfill and

how payment is to be made to those entitled

to a share of the royalties.

Recording Contracts

In the exclusive artist recording contract,

where the recording company directly signs

the artist to the label, the recording company

pays all costs of production and advances

some money to the artist to help him pay for

initial expenses. The artist receives royalties

directly from the recording company, but only

after all production costs and advances have

been recovered.

In the “all-in” artist contract, the artist is

signed to the recording company, but furnishes his own independent producer. Royalties from the sales of recordings (after all costs

and advances are recouped) are paid directly

to the artist, who then pays the producer from

sale price, with 2 to 3 percent of that going to

the producer; for a well-known artist, the

minimum is 14 to 15 percent, and often 17 to

20 percent,6 with 4 percent going to the producer.7 These rates, however, may escalate after a specified number of sales.

In the production contract, the recording

artist works with an independent production

company, which then signs with a recording

company. The production company pays for

the costs of the “demos” or “masters,” which

are then submitted to the recording company.

The recording company pays all costs of production either directly or indirectly: it either

advances funds to the production company or

pays the costs directly. The production company, producer, and/or the artist may also be

granted an advance to help cover any additional costs. After all costs are recovered and

all advances are recouped, the recording company pays the production company an “all-in”

royalty, out of which the production company

pays the artist and/or producer. The artist and

producer are paid the percentage of the royalties stipulated in their contracts.8 Royalty

payments for the artist typically range from

10 to 12 percent of the 13 to 18 percent that

the production company receives from the recording company.9

Under terms of a master purchase contract,

the production company sells the masters of a

sound recording to the recording company.

The production company is reimbursed for all

costs incurred in the manufacturing of the

masters. Before any royalties are paid to the

production company, however, these costs

‘H. Rosen, Recording Industry Association of America, letter toJ. Winston, OTA, May 2, 1989. Enclosure with commentson draflch.

4, p. 1.

3H. ~~n, FUAA, letter to J. Winston, OT~ May 2, 1989.

BH. ~Wn,~letter to J. Winston, OT~ May 2, 1989. Enclosure with comments on drafl ch. 4, p. 2-

T~tiing ~ompy exmtive, ~rson~ communication, Feb. 29, 1988.

8H- ~=n,~]etter t. J. Winston, OTA, May 2, 1989. Enclo~re Mth comments on drafl ch. 4, p. 3.

‘Ibid.
Photo Credit: The Robb Family, Cherokee Recording Studio

Modem recording studio.

and any other advances paid to the production

company must be recouped. Then, the production company receives royalties based on

100 percent of the recordings sold, which usually account for 85 to 90 percent of shipments. 10 The artist, in turn, is paid through

his production company.

Royalty Base

Royalties are either based on the manufacturer’s suggested retail list price (e.g., $8.98)

or are doubled when based on the wholesale

price ($3.90 to $4.00), which could result in

nearly a 28-percent rate for the artist (since

wholesaling does not involve any packaging

deductions). 11

Recording companies pay royalties not on

the number of recordings shipped, but on

those recordings actually sold.12 Most recording companies will also withhold a certain percentage of royalties for what they call

‘“Ibid.

I I ~m~erand ~]dring,~p. ~it.,fmtnote ],p. 170, r=ord Compny ex~utive, person~communication, Feb. 29, 1988 .

Izsheme] ~d Krasi]ovsky, op. cit., fOOtnOte 1, p. 4.

20-900 - 89 - 4
yp

times, returned recordings are either recycled

or redistributed at reduced prices. The artist

receives minimal or no royalties on redistributed albums, since they are sold at the manufacturing cost or less.14

Artists receive no royalties on recordings

given to radio stations or record stores for

promotion. Recording companies believe that

these free promotional albums expose the recording to a wider audience, which may then

purchase its own copies.

Record Club Sales15

Artists are usually paid half of the recording

company’s receipts for record club sales,16 and

no royalty on “bonus” or “free” albums given

away to the club’s subscribers. Record clubs

normally obtain a license for the masters and

pay a royalty to the recording company based

on 85 percent of sales— a royalty of approximately 9.5 percent of the club’s member price,

less a packaging deduction.17 Record club

owners argue that they should not have to pay

royalties for free albums since they are providing the recording company with an alternative means for distribution. They deem it necessary to make special offers and bonuses as

incentives to subscribers because of large

membership turnovers. An artist can, however, negotiate a clause in the contract that

limits the number of albums that can be given

away as bonuses.

computed at a rate approximately half that of

sales in the United States. The lower foreign

royalty rate reflects the fact that companies

without foreign affiliates must lease their

products to other firms for foreign distribution. The U.S. recording company receives the

royalties and then distributes a portion to the

artist based on 100 percent of sales. In cases

where the company has its own foreign subsidiary, there is no royalty paid to a third

party, and the artist receives up to 75 percent

of the domestic rate. Some companies with

their own foreign affiliates may lease their

products to a subsidiary if it is believed that

the product will not sell in the foreign territory.18

Packaging

Packaging deductions are part of the contract negotiations and may vary considerably.19 Deductions typically range from 10 to

12 percent of the retail price for records, 15 to

20 percent for cassettes, and 25 to 30 percent

for compact disks, depending on the cost of

the cover and artwork.20 Since the recording

company assumes the packaging costs, it believes that the artist should be paid royalties

only on the music and not on the artwork. Yet,

except in instances where there are very low

record or tape sales, the costs for the cover and

artwork are much lower than the packaging

deduction. 21

13H. ~=n,~]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on drti ch. 4, p. 4.

“Ibid.

13Materi~ ~en from Sheme] and Krasilovsky, OP. cit., footnote 1, p. 57.

IBH. fisen,~]etter to J. Winston, OTA, May 2, 1989. Enclosure with comments on draft ch. 4, p. 5.

1 TSheme] and Kasi]ovsky, op. cit., fmtnote l) P 57.

16Weissm~, op. cit., footnote IJ P- 55”

19H. ~sen, ~]etter t. J. Winston, OT~ May z, 1989. Enc]o~re ~th ~mments on draft ch. 4, p. 6.

~~mser ~d &ldr@, op. cit., footnote 1, P. 170.

2’Ibid.
When compact discs (CDs) were first intro

duced in the United States in 1983, their retail

selling price was somewhere in the 30 dollar

rang23 because of their high manufacturing

and production costs. Since recording companies did not expect a high volume of CD sales

for the first few years, they paid the same royalty on CDs that they paid on comparable vinyl LPs, regardless of the differences in their

prices. They usually followed this practice for

the first 3 years of the contract, after which

they renegotiated the royalty on CD sales to

reflect any changes in the market place.24

Some companies, however, renegotiated rates

3 years from the release of the artist’s first CD

rather than from the beginning of the contract

period. 25 Recording companies deducted 25

percent for packaging, a higher percentage

than the typical deduction for conventional

LPS.

26 This practice continued for 2 or 3 years.

Some successful artists were able to negotiate

a “favored-nations” clause that would automatically increase their royalty payments if

the recording company increased its royalty

rates for newly signed artists.

Recording companies have recently had to

reconsider the issue of CD royalties. With the

initial costs of research and development now

recovered, the cost of raw CD production has

ae dowto about $.9 s a esut, Cpces

are gradually beginning to drop as sales rise.

The format’s enormous success has come in

large part from sales to relatively affluent,

older consumers who purchase CD players

and then replace their favorite LPs with CDs.

With higher profit margins than records or

tapes, CDs have become the most profitable

format for companies: a CD that may have

cost $5 to $6 to produce and distribute will sell

for $10 or more. Artists are beginning to demand higher rates for CD royalties now that

the contractual clauses allowing for automatic increases are beginning to expire.30

Recording companies, forced to reevaluate

their royalty payment systems, face several

problems. First, there are no “suggested retail

list prices’ ’per se for most CDs,31 as compared

to the suggested retail prices listed for LPs.

Most recording companies pay a royalty rate

on LPs based on their suggested retail list

prices, which remain fairly constant, rather

than on their wholesale prices, which constantly change. Using this royalty basis,

wholesale prices can be raised without affecting retail prices. For CDs without a suggested

retail price, however, the recording companies

base royalties on the constantly changing

wholesale prices of CDs.

22Materia] for this ~=tion ~a~ ~en from: Steve Fiott, “~]watlon of Independents, ’’@$~l Au&o, VO]. 5, No. 3, November 1988, p.

36, Sidney Shemel and M. William Krasilovsky, This Business of Music, op. cit., footnote 1, pp. 7-8; Jean Rosenbluth and Ken Terry,

“CD Royalties on the Upswing: Most Acts Benefit From Lower Costs,” Billboati, vol. 100, No. 4, Jan. 23, 1988, pp. 1, 84; Alan Siegal,

“(Si Si) Je Suis un Rock Star, ” op. cit., footnote 1 , pp. 120-123, and interviews with record com~y executives.

23Siegal, “(Si Si) Je Suis un Rock Star,” op. cit., footnote 1, p. 121.

z4~1d., p. 121; interview.

ZsSleW], ~t(si S1) Je Suis un ~k Star, ” Op. Cit., footnote ~) P. 121.

zGSheme] and fiasi]ovsky, op. cit., footnote 1, p. 7, R.menbluth and Terry, op. cit., footnote 22, P. 84.

27Fiott, op. cit., fOOtnOte 22, P 36”

zaIbid.

awcord ~ompy exWutive, ~rsona] communication, June 21, 1988.

‘O~senbluth and Terry, op. cit., footnote 22, pp. 1, 84, intefiew.

31 The fo]]o~ng is bas~ on ~r~ona] communication With a record company exmltive, Dec. 13, 1988.

There was some disagreement among advisory panel members as to the prevalence of CD list prices and the degree to which they

correspond to retil prices.
Photo Credit: Ed Asmus, Courtesy of MTS, Inc.

Compact discs have become a profitable format

The problem is further complicated because recording companies charge various

distributors different prices. Retailers are

charged higher prices for items than are subdistributors, since subdistributors must also

warehouse the merchandise. Subdistributors

comprise 95 percent of a recording company’s

clients; the other 5 percent are retailers. To

compensate for the decrease in royalties

caused by the lower prices charged to subdistributors (the current subdistributor price

is approximately $9.00),32 a provision called a

“CD uplift” is usually applied to this price.

The “CD uplift” increases the wholesale price

125 percent over the original wholesale price,

less a packaging deduction of approximately

20 to 25 percent. Using the increased wholesale price, the royalty rate is then based on a

percentage of sales. The artist is paid a percentage of that royalty base – usually 12 to 15

percent – depending on the provisions of the

recording contract. No royalties are paid on

free or promotional copies of CDs.

With the uplift, an artist might earn more

royalties from a “premium” CD than from the

same analog recording.33 Once a CD is discounted, however, royalties may be drastisa~ord compny executive, personal communication, k. 13, 1988.

ss~ord Compy ex~tive, personal communication, June 21, Iw.
tion.

In general, recording industry observers see

CD royalty rates continuing to rise, especially

now that the initial research and development

costs of the CD have been written off.35

ROYALTIES FROM MUSIC

USED IN RECORDINGS

Compulsory Licenses36

The Copyright Act of 1976 grants the copyright owner of a musical composition the exclusive right to be the first to record and distribute phonorecords of the protected

composition within the United States, or to

authorize others to record and distribute.37

Once that right has been exercised, anyone

who makes and distributes a competing rendition of the musical composition must obtain what is called a “compulsory” license

from the copyright owner and must pay royalties on phonorecords made and distributed

under the license. While ensuring copyright

owners the opportunity to be the first to record and distribute their works and providing

them payment for all subsequent uses, the

compulsory licensing system also prevents

copyright owners from monopolizing the future use of a musical composition.

Licenses set forth the conditions and royalties for each recording made and distributed.

The new recording must be distinguishable

right infringement. In addition, the phonorecord must be distributed to the public for

private use only. A compulsory license does

not authorize the licensee to distribute

phonorecords for commercial use, such as

background music services, nor does it

authorize the public performance of the musical composition.

To obtain a compulsory license, the intended user must notify the copyright owner

within 30 days after the phonorecords are

manufactured and before they are distributed. If the copyright owner is not known, the

licensee files a notice with the U.S. Copyright

Office. Generally, a copyright owner must be

identified in the registrar or other public records of the Copyright Office in order to collect royalties from a compulsory license.

Although the intended purpose behind the

compulsory license was to encourage the flow

of creativity by ensuring certain rights to the

copyright owner, some people think that compulsory licenses restrict creativity. Canada recently abolished their compulsory license for

just this reason.38

Mechanical Royalties

Record companies must make automatic

payments to songwriters and publishers for

the right to make and sell copies of their recorded works. A copyright owner receives a

statutory royalty rate depending on the length

of the song, the number of songs on the alaA~senb]uth and Terry, op. cit., footnote 22, P. ~.

351bid.

36 Materi~ for this -tion is taken from: ~~fi Thorne, “Compu]soW Licensing The Music Makers as Money Makers, ” 1985~ntertainment, Publishing and the Arts Handbook, John David Viera and Michael Meyer (eds. ) (New York, NY: Clark Board man Co., Ltd.,

1985), pp. 281-294.

aTTit]e 17, U.S. Code, section 115.

~SW mem~r of Copyright Oflice, personal communication, Feb. 6, 1989.
and not from the artist’s share.40

The Copyright Royalty Tribunal determines mechanical royalty rates, which it adjusts every 2 years on the basis of the Consumer Price Index. The current rate is 5.25

cents for each musical composition or one

cent per minute or fraction thereof, whichever

is greater. The rate cannot be adjusted below 5

cents per musical composition or .95 cents per

minute, nor can it rise more that 2 percent per

adjustment period.41

Compulsory mechanical license fees are seldom set at the statutory level, however. The

user can often negotiate a lower rate with the

copyright owner. For example, when the

owner is related to the recording artist, therecord company may pay rates only three-quarters of the statutory rate. Also, certain classes

of recordings, such as recordings distributed

free, may be exempted.42 In addition, an artist’s contract often provides for future songs

either written or cowritten by him to be

brought under the recording company’s “control.” Recording companies often secure reduced mechanical royalty rates for these “controlled compositions.”

y gy 

1927 and is a wholly-owned subsidiary of the

National Music Publishers’ Association

(NMPA). 44 It currently represents over 6,000

publishers, not all of whom belong to NMPA.

The agency is responsible for authorizing recording companies to make and distribute

phonorecords of copyrighted music owned or

controlled by the publishers. It licenses approximately 75 percent of U.S. music on records, tapes, CDs, and imported phonorecords, plus music used in films, on T.V., or

in commercials. The agency also collects and

distributes mechanical royalties for most U.S.

publishers.

The Harry Fox Agency licenses copyrighted

musical compositions for commercial records, tapes, CDs, etc. distributed:

to the public for private use;

for use in audio/visual works (synchronization), including motion pictures,

broadcast and cable T.V. programs, and

CD videos;

for use in broadcast commercial advertising;

sgNet ~]es eW~ ~OSS ~es, ]ess returns. Record company executive, personal communication, June 2, 1989.

4CIH. ~sen, RI@ ]ettert,o J. Winston, OTA, May 2, 1989. Enclosure with comments on drafl ch. 4, P. 13.

4’ “The Harry Fox Agency, Inc.: Licensing Service of the National Music Publishers’ Association,” pamphlet published by the Harry

Fox Agency, Inc., 1988, p. 6.

Qz~an H. sled, “Lexicon P]us, ” Bnxaking in to the Music Business (Port Chester, NY: Cherry Lane Books, 1986), p. 14.

dsThe fo]]owing is t~en from materi~ contiined in Shemel and Krasilovsky, op. cit., footnote 1; “The *WFOX Agency, Inc.: Licensing Service of the National Music Publishers’ Association,” op. cit., footnote 41; and “The National Music Publishers’ Association, ”

pamphlet published by the National Music Publishers’ Association.

44The Nation~ Mu5ic ~bli5her5~ A5m1ation i5 one of thr= music publishers’ trade associations in the united States. The other

two are: the Music Publishers’ Association of the U. S., specializing in educational and concert music, and the Church Music Publishers’ Association.
puter chips, syndicated radio services,

and even novelty greeting cards).

It also licenses performing rights for theatrical motion pictures in the United States.

In addition to issuing licenses and collecting

royalties, the Harry Fox Agency represents

publishers in proceedings against delinquent

licensees and infringers, and audits all licensed record companies and licensees who

use copyrighted musical compositions. The

agency serves as an information source, clearinghouse, and monitoring service for licensing

musical copyrights. It maintains extensive

files of information on the public domain

status of compositions for purposes of issuing

licenses. It also works with the international

collection societies.

The Harry Fox Agency retains a commission from the royalties collected on behalf of

its members: 4.5 percent from mechanical licenses from music; 10 percent on synchronization licenses for films, with a maximum of

$250 per composition; 10 percent of royalties

on T.V., home video, and commercial synchronization licenses, with a maximum of

$2,000 per composition; and 10 percent on

electrical transcription licensing (syndicated

radio, background music, etc.), with a maximum of $2,000 per composition.

RECORDED MUSIC

The 1976 Copyright Act gives copyright

owners the exclusive right to perform their

works publicly. The Act defines a “public”

performance as one performed or displayed in

a place open to the public or a place where a

substantial number of persons outside of a

normal circle of family and social acquaintances is gathered, or any performance that is

transmitted or otherwise communicated to

the public, by any means or process, regardless of whether the public receives the transmission in the same location or time as the

original performance.45

Musical works are included as part of this

right, but sound recordings are not. Thus, the

copyright owner of a recorded song, such as

the composer or music publisher, is entitled

to be compensated for public performances,

whereas the copyright owner of the sound recording, such as a record company, is not. Virtually every user other than the copyright

owner who publicly performs music must obtain a license from the copyright owner, or be

liable for infringement. The user is obligated

to seek out the copyright proprietor and obtain permission, or to contact the appropriate

performing rights society to obtain a license.46

a5Tit]e 17, U.S. Code, ~. 1O1.

46&rnard ~rman ~d I, Fr~ ~ni~~rg, “performing Rights in Music ~d performing Rights Societies, ” Journal of the Copyright Society of the USA, vol. 33, No. 4, July 1986, pp. 347-348.
ier and more economical for the hundreds of

thousands of commercial users of music.47

Through the use of “blanket licenses,” users

of music are able to perform copyrighted music without having to negotiate a separate license with each copyright owner, or having to

keep logs to account for each performance.48

Performing Rights Societies49

There are three performing rights organizations in the United States – the American Society of Composers, Authors, and Publishers

(ASCAP), Broadcast Music Inc. (BMI), and

the Society of European Stage Authors and

Composers (SESAC). Each has its own system

of determining how much airplay each recording receives and to how much of the collected

revenues each copyright owner is entitled.

ASCAP, founded in New York in 1914, currently includes approximately 40,000 composers, lyricists, and music publishers.50 It is

the oldest and largest (in terms of billings)51

performing rights licensing organization in

the United States and is wholly owned and op

y , p

tors, who are elected by publisher members.

Broadcast Music, Inc.52 was formed in 1940

by a group of about 600 broadcasters who

boycotted ASCAP music. BMI stresses an

“open door” policy, inviting all writers to join,

especially those in the fields of country and

soul music. Currently, BMI has a membership

of approximately 90,000 composers, writers,

and publishers and a repertoire of over 1.5

million titles.53 It is the world’s largest music

licensing organization in terms of members or

afllliates. 54

Together, ASCAP and BMI collect over 95

percent of all U.S. performing rights royalties.

SESAC, Inc.,55 which represents approximately 2,200 writers and 1,200 publishers,

collects the remaining 5 percent of U.S. performing rights royalties.56 SESAC has a

smaller, more specialized repertory than that

of ASCAP and BMI57 — about 155,000 songs.58

Organizationally, SESAC also differs from

ASCAP and BMI. As a private licensing company owned and run by the Heinecke family

since 1930,59 SESAC, after deducting operat-

“

7

’’ The ASCAP License: It Works for You,” pamphlet published by ASCAP; “BMI and the Broadcaster: Bringing Music to America, ”

pamphlet published by BMI, 1988.

4eKorm~ and Koenigshrg, op. cit., footnote 46, p. 335.

4gMateri~ for this ~tion was @ken from: Korman and Koenigsberg, op. cit., foonote 46, pp. 332-367; Shemel ~d Krasilovsky, OP.

cit., footnote 1, pp. 182-201.

“’ASCAP: The Facts,” a pamphlet published by ASCAP, 1987.

51VOW1, op. cit., footnote 1, P. 135”

52Materi~ for this s=tion is Men from “BMI ~d the Broadcaster: Bringing Music to America, ” op. cit., footnote 47.

53’’BMI and the Broadcaster: Bringing Music to America,” op. cit., footnote 47.

54’’BMI, Your Bridge to the World’s Greatest Music: A Guide to Music Listening,” a pamphlet published by BMI, 1987.

55SESAC, inc. was former]y know as the &iety of Europem Stage Authors ~d Composers. In those days, its repertoire was

comprised mostly of American and European classics, along with religious and country music. They have since changed their name to

reflect the expansion in their repertoire to include all categories of music. (“SESAC: Information for Prospective Writers and Publishers,” a pamphlet published by SESAC)

56vOW1, op. cit., footnote 1, PP. 135-136.

S7Jack c, @ldstein, (~For the ~ord: Questions ~d Answers On the perform~ce of Copyrighted Music” (Houston, ~: Arnold,

White & Durkee, 1987), p. 1.

581nteMew ~th SESAC executive, Feb. 9, 1989.

S.Q~~SESAC: Information for ProsFtive Writers and Publishers,” a pamphlet published by SESAC.
the remainder to the copyright owner and re

tains the balance. GO ASCAP and BMI, on the

other hand, are nonprofit organizations. After

deducting operating expenses from royalty

revenues collected, they distribute the balance to their members or affiliates.Gl Recently, ASCAP’s operating expenses have run

about 18 to 19 percent of its total revenues62

and BMI’s 15 to 16 percent.63

Licenses 64

Both ASCAP and BMI charge radio and

television broadcasters a licensing fee based

on a percentage of the broadcaster’s net revenues, rather than on the extent of the use of

their music. Broadcasters pay fees either on a

“blanket” license, which is based on a small

percentage of the net revenues from sponsors

of all programs, or on a “per program” license,

which is based on a larger percentage of net

revenues, but only on the specific programs licensed.65 Both the “blanket” license and the

“per program” license cover the entire repertory of songs for a period of years. BMI also

offers broadcasters a license for noncommercial use and one for noncommercial educational use.66

SESAC, like ASCAP and BMI, licenses virtually the entire broadcasting industry.67 But

tion, SESAC bases its licenses on fixed deter

minants such as station location, hours of music broadcasting, and the station’s advertising

rates.

Other users of music–bars, restaurants,

taverns, etc. – are also required to obtain a license from each performing rights society

that represents the copyright holders of the

music they are using. In the case of live performances, performing rights societies license

the establishment owner rather than the musicians because they believe that it is the establishment owner who derives the ultimate

benefit from the performance.68 It is also

more practical and much easier to track performances in establishments than to locate

and license the musicians, who are rarely ever

in the same place for a long period of time.69

Because these users of music are harder to

identify, locate, and contact than are broadcasters, who are licensed by the Federal Communications Commission (FCC), performing

rights organizations sometimes send field

representatives to visit establishments that

might be using their music.70 Often they learn

about these establishments through local

newspapers or magazines, or through word of

mouth. ASCAP has 23 district offlces71 lo-

%hernel and Krasilovsky, op. cit., footnote 1, p. 1S4.

61&]dste1n, ~p. cit., fmtnote 57, ~rmm~d~niW&rg, op. cit., f~tnote46, p, 363; Sheme] ~d fiasi]ovsky, op. cit., footnote 1, p.

184.

Eiz~rmm ~d ~ni~~rg, op. cit., fOOtnOte 46, p. 363

MBM1 ex~tlve, ~rwn~ communication, July 12, 1~~.

64Materi~ for this ~ion iS t~en from: ~rmm ~d ~nigs~rg, op. cit., footnote 46, pp. 332-367.

es~rm~ ~d ~nigskrg, op. cit., footnote 46, p. 359.

M~~BM1 ~d the Broadcast er: Bringing Music to AnleriCa, ” op. cit., footnote 47.

sTSheme] and Krasilovsky, op. cit., footnote 1, P. 156.

6a~rmm ~d ~nigs~rg, op. cit., footnote 46, p. 3~.

eg~id,; see a]so @]dstein, op. cit., footnote 57, pp. 6-7.

TO~rmm and ~nigs~rg, op. cit., footnote 46, p. 3~.

7’ Ibid.
If an establishment refuses to obtain a license, yet continues to use copyrighted music

without permission, legal action may follow.73

Copyright infringers often end up paying

more in statutory damages than they would

have paid in licensing fees.74 In addition, the

infringer is still required to obtain a license to

continue playing copyrighted music at the establishment.

Foreign Licenses75

All three performing

to their licensees the

rights societies grant

right to perform all

works contained in their repertory, including

works of foreign origin. Each has its own

agreements with foreign performing rights societies. Most countries only have one performing rights society representing its writers and

publishers, so that a single foreign society will

usually represent all three U.S. societies. ASCAP, BMI, and SESAC collect fees in the

United States from users of copyrighted foreign music on behalf of their respective foreign societies, and in return, these foreign societies collect fees in their country from users

of copyrighted American music.

Songwriters may get additional help in col

lecting their royalties through membership in

the Songwriters Guild.76 The Songwriters

Guild77 is a voluntary national songwriters’

association, comprising approximately 4,000

songwriters worldwide and representing all

types of music, including motion picture and

television scores as well as commercials. For

those members who do not control their own

publishing rights, the Songwriters Guild collects royalties from publishers for sheet music, song portfolios, recordings, tapes, motion

picture, and television uses. Each year, the

Guild selects one major music publisher and

several small and medium-sized publishing

firms and conducts thorough audits of their

books. According to the Guild, over the years,

they have recovered over $6 million that

might not otherwise have been paid to writers. The Guild also maintains records of royalty payments for 6 years and a file of all contracts submitted.

One stated goal of the Songwriters Guild is

to develop the talents of young songwriters78

and to protect them in their dealings with

publishers. 79 It holds special seminars and

workshops where writers share their ideas or

72A “~nwriters ~d CopWight: Questions ~d Answers, ” a pamphlet published by BMI, 1987.

73~rmm ~d ~ni~~rg, op. Cit., footnote 46, p. 362; Goldstein, op. cit., footnote 57, P. 2.

74~rmm ~d ~niw~rg, op. cit., fmtnote 46, p. 363; Goldstein, op. cit., footnote 57, p. 8; The ASCAP License: It Works for You, ”

op. cit., footnote 47.

T~Materl~ for this ~tion is bas~ on: Sheme] and Krasilovsky, op. cit., footnote 1, pp. 196- 197; “BMI, Your Bridge to the world’s

Greatest Music: A Guide to Music Listening,” op. cit., footnote 54; and “ASCAP: The Facts, ” op. cit., footnote 50.

Ts~ericm Gui]d of Authors ~d Composers, “Record World Salutes the 50th Anniversary of AGACfI’he Songwriters Guild,”

newsletter published by the Songwriters Guild, Apr. 10, 1982.

TTThe ~nWriters Gui]d has gone through a number of name changes since its inception in 1931. It was first knOwn as the %ngwrlters Protective Association until the mid-sixties, when its name was changed to the American Guild of Authors and Composers, and

just recently it was expanded to AGACA’he Songwriters Guild.

T~The Gui]d m~n~ns the AGAC Foundation, a nonprofit educational organization that provides young writers with the opportunity to learn about the music business through university scholarship grants and various Guild programs.

Two Prot=t the rights of son~riters in their de~ings with publishers, the ~ngwriters child recommends the uw of a stidd

guild contract (developed over the years), that extends the period in which the writer may recapture his/her foreign copyrights from

28 years to 40 years from the date of agreement (or 35 years from the initial release of the sound recording, whichever is earlier). In

addition, the Guild contract contains provisions that give the writer a right of recapture if the publisher fails to obtain a recording of a

song within a specified time period (not to exceed 12 months). Although the Guild encourages songwriters to use this form of contract

in all of their dealings with publishers, songwriters do not make frequent use of this contract. Copyright Policy Planning Advisor, U.S.

Copyright Oflice, personal communication, Feb. 6, 1989.
g p

For writers who choose to control their publishing rights, the Guild offers a service called

the Catalogue Administration Plan (CAP).

CAP assists songwriters in registering, assigning, and renewing copyrights; collects and

pays royalties; and registers songs with one of

the three performing rights societies. The fee

for this service is 2 percent of the publisher’s

performance income and 7.5 percent of all

other income.

In addition to a copyright renewal service,

the Guild also provides other services, such as

securing medical and life insurance, reviewing

songwriting contracts, financially evaluating

song catalogues, and administering estates to

protect the heirs of its members. The Songwriters Guild also promotes legislation affecting songwriters’ copyrights. It has advocated

legislation raising the mechanical rates paid

to publishers and songwriters by users of their

songs.

Another major songwriters’ organization,

the National Academy of Songwriters80

(NAS), formerly known as the Songwriters

Resources and Services, does not become involved directly in the distribution of royalties

to its members. NAS is a nonprofit organization dedicated to supporting and encouraging

songwriters and to advancing the songwriting

profession. It was founded in 1973 with the

goal of providing songwriters the opportunity

to meet and establish important relationships

with music industry professionals and other

songwriters. Its membership consists not only

NAS manages several services that match

songwriters to collaborators or songwriters to

publishers, producers, and artists who are

looking for songs. NAS also sponsors many activities that give members the opportunity to

work with others in the songwriting community. It sponsors weekly workshops where

members can have their songs critiqued by

peers and representatives of major publishing

and recording companies. For a nominal fee,

songwriters outside of the Los Angeles area

can mail in songs to be critiqued. In addition

to operating a toll-free line for music-related

questions, it also conducts seminars, where

guests are invited to discuss the various aspects of songwriting.

NAS also assists in the development of local

songwriting organizations throughout the

country, and provides members with health

insurance coverage, discounts on legal services, books, and tapes, and a 10-percent discount on classes offered in the UCLA Extension Songwriting Program.

Copyright Royalty Tribunal81

The Copyright Royalty Tribunal (CRT) was

created by the Copyright Act of 1976 and began operations shortly before the effective

date of the act. It currently is made up of three

Commissioners, 82 who are appointed by the

President of the United States with the advice

and consent of the Senate, three assistants,

and a general counsel.

~Nation~ Academy of Songwriters membership information.

81Materi~ for this -ion is ~~on: Offlce of the Federal Register, National Archives and Records Administration, The Unikd

States Gouemment Manual 1988/89 (Washington, DC: U.S. Government Printing Office) June 1, 1988, p. 62; Copyright Royalty Tribunal, “Copyright Royalty Tribunal Summary Fact Sheet, ” November 1988; and Robert Cassler, CRT, letter to OT~ Apr. 28, 1989.

~he CRT is authorized to have five Commissioners, but since September 1984, the Tribunal has never had more than three– a

ball, H.R. 1621, is pending to reduce permanently the number of Commissioners to three. Two of the five initial Commissioners’ terms

were for 5 years; the other three Commissioners’s terms are for 7 years – the purpose of this was to stagger the Commissioners’

terms. (Robert Cassler, CRT, letter to OTA, Apr. 28, 1989. )
ASCAP

Each performing rights society has its own method of logging programs to determine the amount of royalties

to be paid to its constituents. American Society of Composers, Authors and Publishers (ASCAP) surveys its users

of recorded music to obtain a rough estimate of how much airplay a particular song receives. It conducts a complete census of all performances on network television, and in concert halls, educational institutions, certain

wired-music services, and a group of nonbroadcast, nonconcert licensees such as circuses and ice shows. ASCAP

must randomly sample all other performances.

For example, local television station performances are sampled by means of audiotapes, TV Guide listings,

and cue sheets, which are detailed listings of all music on a program, usually furnished by the program producer.

Each year 30,000 hours of local television programs are surveyed.

ASCAP samples over 60,000 hours of local radio hours each year. Local radio stations are tape-recorded in

6-hour segments. Outside consultants send taping schedules directly to the people in the field, so neither the

stations nor ASCAP’s office staff know in advance which stations are being taped or when. This system relies

heavily on the ability of ASCAP’S staff to correctly identify each song when the tapes are analyzed-a timeconsuming and costly task. I

The majority of ASCAP’s “general licensees” (e.g., restaurants, bars, etc. ) are not surveyed because of the

time and cost factors. Instead, ASCAP uses feature performances on radio and television as “proxies” for the

distribution of these shares.

BMI

Broadcast Music Inc. (BMI) uses music broadcast by a scientifically chosen sample of stations as the basis for

its quarterly distribution of royalties to songwriters, composers, and copyright holders.2 Each licensee is asked to

supply a station-prepared log of all music performed in a particular week, predetermined by BMI. The names of

the writers and publishers as well as the name of the artist are recorded on this log, thus eliminating the problems

with identifying each song. The station is notified in advance which week to log, and BMI strives to keep the list

secret from publishers and writers, An independent accounting firm determines which stations are being logged

and when, so that no BMI employee has prior knowledge of what stations are being logged.

For performances shown on television, BMI uses an extensive national database of information about network, syndicated, and cable programming and details the use of music in those programs listed by TV Guide.

SESAC

The Society of European Stage Authors and Composers (SESAC) does not have a system of accurate local

station logging procedures. It relies instead on reviews of network logs, limited spot checking of local stations, and

trade paper charts to determine the amount of airplay received by a particular song.

I Dick Weissman, “Performing Rights Societies,” The Music Business: Career Opportunities and Self-Defense (New York,

NY: Crown Publishers, Inc., 1979), p. 83.

2“BMI and the Broadcaster: Bringing Music to America, ” op. cit., footnote 47.

Under the compulsory licensing provisions bution of the royalties, in these cases, is left up

of the Act, the Tribunal is responsible for de- to the parties involved. These transmissions

termining and distributing the copyright roy- involve the use of published, nondramatic

alties collected for retransmissions of broad- compositions and pictorial, graphic, and

cast signals by cable systems and the public sculptural works by noncommercial broadperformance of music on jukeboxes. It is also casting stations. Royalties collected from the

responsible for determining the royalty rates compulsory licenses for making and distributor phonorecords and for certain public ing phonorecords are distributed either dibroadcast transmissions, although the distri- rectly to the copyright owners or their desig-
In recent years the Tribunal has been given

the additional responsibilities of:

●

●

distributing the satellite carrier copyright royalties granted by the Satellite

Home Viewer Act of 1988, which allows

for the retransmission of broadcast signals directly to satellite dish owners for

private viewing; and

monitoring private negotiations between

music owners and jukebox operators for

private jukebox licenses intended to supersede the jukebox compulsory license.

The CRT proceedings are intended to balance the relative harms and benefits among

owners and users of copyrighted materials

and to increase public access to creative

works. Several years ago, however, the Tribunal was criticized for having failed to regulate

copyright compulsory licenses as they were intended to be administered.83 According to the

CRT, however, these criticisms are unfounded, especially given the litigious nature

of the parties involved.84

Performance Rights Under U.S. Law

Sound recordings, as defined by public law,

include all works that result from the fixation

of a series of sounds (excluding those accompanying motion pictures or other audio-visual

works) regardless of the nature of the material objects in which they are embodied (i.e.,

disks, tapes, or other phonorecords).86

United States copyright law does not provide for copy-right owners of sound recordings — usually performers, producers, or recording companies — to receive compensation

for public performances of the recording.

Authors and composers are, however, compensated for the public performance of their

works through performing rights organizations.

Performers and producers have argued vehemently that U.S. copyright law should be

amended to include a “performance right.”

They believe that copyright holders of sound

recordings do not receive fair compensation

83The copyright my~ty Tribunal Sunset Act of 1985 was referred to the House Committee on the Judiciary ~d Its su~ommittee

on Courts, Civil Liberties, and the Administration of Justice. This bill sought to terminate the services of the Copyright Royalty Tribunal and transfer its functions to the Register of Copyrights. Hearings were held, but no legislation emerged from the committee.

For more information, see U.S. Congress, House Judiciary Committee, Copyright Royalty Tribunal and U.S. Copyright Office, hearings before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice, July 11, Sept. 18, and Oct. 3, 1985 (Washington, DC: U.S. Government Printing Ofllce, 1985).

M~~A Cassler, CRT, letter to OTA, Apr. 28, 1989, p. 4.

8~Materia] for this section follows: Gary L. Urwin, “Paying the Piper: Performance Rights in Musical Record ings,” Communications

and the Law, vol. 5, Winter 1983, pp. 3-57, U.S. Congress, House Judiciary Committee, Pe+ormance Rights in Sound Recordings, hearings before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice, Serial No. 83, Mar. 29 and 30, May 24 and

25, 1978, U.S. Congress, House Judiciary Committee, Performance Rights in Sound Recordings, hearings before the Subcommitt.eeon

Courts, Civil Liberties, and the Administration of Justice, Committee Print No. 15, June 1978, in particular pp. 100-105, 114-117,

254-259, 328-351,366-369,570-576, and 580-589.

~Sie@, ‘tLexicon PIus, “ op. cit., footnote 42, p. 20.
Both ASCAP and BMI have developed their own complex formulas for converting the amount of airplay from

a particular station into an index of national play during the time surveyed.2

ASCAP

The American Society of Composers, Authors and Publishers (ASCAP) assigns each performance a value

depending on what type of performance it is, i.e., a feature, background, etc. Each performance is then weighted

according to the size and importance of the logged station, time of day of program, etc. to determine the total

number of performance credits. Each quarter, the total performance credits for writers as a group, and for publishers as a group, are divided into the respective dollars of distributable revenue to yield the dollar value of a

performance credit for each group. On payment, ASCAP issues a detailed statement showing the title of the work

surveyed, the number of performance credits earned, and the media on which the performance appeared.

ASCAP has two systems of payment for its writers. The “current performance” plan distributes the writer’s

share of the money on the basis of his performance over the past four quarters. New writer members are initially

paid on the “current performance” plan, with the option of switching to the “four-fund” basis after 3 full survey

years. The “four-fund” system is a deferred payment plan based partly on current performances, but mostly on

an average of performances over a period of 5 or 10 years.

Distribution of royalties to publishers is determined on a “current performance” basis only, in which the

publisher is paid on an “on account” basis for the first three quarters, with adjustments being made in the fourth

quarter.

BMI

Broadcast Music Inc. (BMI) affiliates are paid according to a published royalty payment schedule, which distinguishes between radio and television performances and between feature, theme, and background musical

performances. A performance index is calculated for each performance, based on the number of times it is played

on the radio and television stations, and the total revenue earned paid to the affiliates. BMI’s royalty payment

schedule allows for bonus credits based on the number of times one’s works are played on the radio or television.

Bonus credits are calculated on a song-by-song basis.

SESAC

The Society of European Stage Authors and Composers (SESAC) distribution system places less emphasis

on actual surveys of performances on the air, and relies more heavily on the availability, diversity, growth, seniority, and commercial value of a publisher’s catalog and the promotional effort of the publisher himself. SESAC

pays its writers and publishers incentives of $240 each for any song recorded on a pop single and $100 each for any

song recorded on a pop album.3 Bonus credits are also awarded for song longevity, crossovers (songs appearing on

more than one chart), and carryovers (those having earning power over a l-year period).

t “ASCAP: The Facts,” OP. cit., footnote 50; “BMI and the Broadcaster: Bringing Music to America,” op. cit., footnote 47;

Korman and Koenigsberg, ~p. cit., footnote 46, pp. 332-367; Shemel and Krasilo%ky, op. cit., footnote 1; “The ASCAP Survey

and Your Royalties, ” pamphlet published by ASCAP, 1986; and Dick Weissman, “Performing Rights Societies,” op. cit., footnote 76, pp. 82-87.

2Weissman, “Performing Rights Societies,” op. cit., footnote 76, p. 83.

3Sheme] and kasi]ovsky, op. cit., footnote 1, p. 185.

from broadcasters and other commercial us- ers, radio stations, and background music

ers of their works. Performing rights in sound services to pay fees for the right to play copyrecordings has long been a hotly contested is- righted sound recordings in commercial opsue, with the first of many performance rights erations. The system proposed in H.R. 1805

bills being introduced in 1925. A bill proposed (97th Congress) would be administered by the

in 1987 (H.R. 1805) would require broadcast- Copyright Royalty Tribunal, with the assis-
rights societies (ASCAP, BMI, SESAC), which

track performances of copy-right owner’s

works. Half of the license fees would be distributed to the copyright owners of the sound

recordings. The other half would be distributed to the performers on the recording, to be

divided equally among all the participants.

Under the proposed system, users of sound

recordings would have the option of paying license fees either on a blanket, or per-use prorated basis. The blanket license fee for radio

and television stations would be based on the

licensee’s net receipts from advertising sponsors during the year; other transmitters of

sound recordings would be subject to fees

equal to 2 percent of their gross receipts from

subscribers. The fee for radio stations with

net receipts of $25,000 to $100,000 would be

$250, $750 for net receipts of $100,000 to

$200,000, and 1 percent of net advertising receipts for amounts over $200,000. Television

stations with net receipts of $1 million to $4

million would be subject to license fees of

$750, and $1,500 for receipts over $4 million.

Commercial users, such as bars and restaurants, would pay $100 each year for each location in which sound recordings are used. Blanket licenses for all other users (with the

exception of jukebox operators) would be established by the Copyright Royalty Tribunal

within 1 year after the bill takes effect. Under

the prorated per-use license, the CRT would

determine the amount based on the extent of

a licensee’s use of recordings, with a maximum of 1 percent of gross receipts for radio

and television broadcasters, and 2 percent for

all other users.87

Broadcasters argue that performance royalties would pose a financial burden so severe

that stations would be forced to choose highincome programming and abandon or curtail

certain kinds of programming, such as public

service or classical programs, that do not generate a set amount of advertising revenue.

They further argue that they compensate performers with free air time, thus promoting record sales and increasing the popularity of the

artists. Furthermore, the broadcasters argue

that a performance right would only exacerbate any injustices in the status quo by increasing the income only of those who are already working and not those who are

struggling to find work.

Performers, on the other hand, argue that

even if they do benefit from free airplay,

broadcasters nevertheless derive a commercial benefit from the performance, and performers are entitled to be compensated for

that use. They argue that broadcasters rarely

announce the names of songs over the air,

much less the names of the artists performing

the songs. They further argue that by allowing

broadcasters to use their music on the air,

they risk overexposing their works. In this

situation performers argue that they are being forced to compete with, and risk being

driven out of work by, their own recorded performances. They argue that if it were not for

the widespread availability of their recordings, they would have many more opportunities to perform their works in person. Broadcasters argue, on the other hand, that a

8TFor more information, s= U.S. con~ess, House Judiciary Committee, Pe~ormance Rights in Sound Rem~ings, op. cit., footnote

90, U.S. Congress, House Judiciary Committee, Performance Rights in Sound Recordings, op. cit., footnote 90, pp. 100-105, 114-117,

254-259,328-351,366-369, 570-576, and 580-589.
than substitutes for, live performances.

The performers also argue that the many

background singers or instrumentalists in the

band, who are also part of the recording, are

not given any credit on the air. They believe

that a performance right would provide at

least some compensation to these performers

since the proposed royalty would distribute

equal income to all performers regardless of

their role in the recording.

ROYALTIES FROM HOME

TAPING

Proposals for a Home-Taping Levy

in the United States

Much of the debate on home copying has focused on imposing some type of levy scheme

to compensate rights holders for the imputed

losses they suffer from the widespread availability and convenience of recording technologies. The U.S. music community has repeatedly proposed that a levy be imposed on blank

tapes as well as on the recording equipment itself to compensate artists and others for

losses due to home taping. The income generated from this levy would be distributed as

royalties among those involved in the creation

of recordings – the composers, authors, musicians, artists, and record companies, as well as

the producer and/or production company.

One proposed blank-tape levy scheme and the

proposed system for allocating the royalties

generated by it, are discussed in detail in box

5-E.

Proponents of a levy scheme for the

United States often point to the international

gy 

exported music products, then it is imperative

that the United States impose some sort of reciprocal system so that other countries will be

able to receive compensation for their works

distributed in the United States. It is important to note, however, that international levy

schemes will not have the same results in the

United States that they have in European

countries because of the political, legal, social,

and commercial/market differences that exist

within the various societies.88

International Perspectives on

Tape Levies

At the time of this writing, no retrospective

comparative or evaluative studies examining

existing levy schemes were available to OTA.

Several of the levy schemes have been put into

effect fairly recently, and an adequate period

of time has not yet elapsed to yield a comprehensive or definitive evaluation of their longterm effects. Some figures have been released

as to how much revenue has been collected by

the various countries, however, and available

statistics are incorporated wherever appropriate (see also tables 5-1 and 5-2). Efforts continue abroad to implement home-copying fees

for audio and video copying.89 The following

sections spotlight some of the systems that

have been put into place.

France

Under French copyright law, right holders

(authors, performers, and producers) are

granted the right to receive fair compensation

~Mike Grubbs, TMdy Electronics, letter to OTA, Apr. 27, 1989.

a9For exmp]e, ~~endment t. the Nether]~d’s copflight law has ~n proposed to introduce a blmk-ttip f=. (Intellectual Fmperty in Business Briefing, vol. 1, Issue 4, May 1989, pp. 3-4. )
ggggppgp

work, but not to the performers appearing on the recording. Performers are, however, protected by criminal laws,

which impose sanctions on those who violate the performer’s right to public performance. Producers and performers assign their performance rights to Phonographic Performance Limited (PPL), which then licenses this

right to users. PPL negotiates sound recording licensing fees with broadcasters and other users of copyrighted

music.

Under British law, performers from other countries have no intellectual property rights in the public performance of their works, and thus, England does not make payments for the public performances of U.S. records

either, although some companies do pay their American affiliates through contract.

Denmark – Like most European countries, Denmark does not consider performing rights for sound recordings a direct copyright, but rather a “neighboring” or “related” right. As such, the performance right is granted

for a term of 25 years, rather than for the full term of copyright, which is life plus 50 years.

Denmark has strict rules regarding the eligibility requirements of performers and producers making claims

to a share of the performance royalties. To receive renumeration for the public performance of their copyrighted

works, copyright owners must become members of GRAMEX, the Danish collecting society, which represents the

interests of the copyright holders in licensing negotiations with broadcasters and other users of copyrighted music.

Revenues from the royalty scheme are divided equally between the performer and the producer. Performers, however, are responsible for paying two-thirds of the administrative costs, since the calculation of performers’ royalties requires more time and effort than that of producers’ royalties. Payments to producers are transferred to the national recording-industry group, which then makes payments to individual labels based on record

sales. Foreign producers receive payments either through Danish subsidiaries or affiliates.

West Germany – Like Denmark, West Germany treats the performance right as a secondary right and not

as an exclusive right, thereby limiting protection to 25 years rather than the full term of copyright. But unlike

other countries, West Germany recognizes the performer as the primary copyright holder of a sound recording,

although the producer is eligible to share in the proceeds.

West Germany’s system of collecting and distributing performance royalties is similar to that of most countries in that the copyright owner assigns his rights to a performance right society, which in turn, licenses this

right to broadcasters and other users of copy-righted music. But whereas most other countries calculate payments

on the basis of air play or play time, West Germany does not. This eliminates the high administrative costs associated with having to determine airplay. This type of system, however, does have implications for the distribution

of royalties among foreign nationals. Because most countries do not determine payments based on the author’s

recording-related earnings as in West Germany, it is hard to compare systems.

‘Material for this sect ion is taken from: U.S. Congress, House Judiciary Committee, Performance Rights in Sound Record-

~ngs, op. cit., footnote 90, pp. 178-186, 195-202, 202-207.

for the private reproduction of their copy- audiotapes and 2.25 FF (37 cents) per hour

righted recordings.90 In December 1986 the playing time for videotapes. Seventy-five perFrench Government imposed a levy on both cent of income is distributed to the individual

audiotapes and videotapes. The levy is set at right owners; the remaining 25 percent must

1.50 FF (25 cents) per hour playing time for be used for the promotion of audio /

‘Material for this section was taken from: Yvonne Burckhardt., “Legislation On Private Copying in Europe and Its Implementation,” lecture given by the General Secretary of FIM in Zurich, June, 1988; and Yvonne Burckhardt, “’New’ Right of Performers”

(Zurich, Switzerland: International Federation of Musicians, March 1987).
ter (CCC). Although the CCC (to date) has focused on distributing income from licenses for photocopying rights,

representatives feel that the CCC could also be adapted to the distribution of income from a home-copying levy.2

The Copyright Act of 1976 grants copyright owners the exclusive right to distribute and reproduce their published works; thus, the law requires that users of copyrighted materials first obtain permission from the copyright owners before making copies beyond the “fair use” principle, subject to exemptions for reproductions by

libraries and archives.3 The task of obtaining permission beforehand, however, can be timeconsumingand inefficient on an individual basis. The CCC estimates that over 800 million pages of photocopies are made from copyrighted works each year by major corporations, and that most U.S. corporations rarely, if ever, obtain permission

for their general photocopying needs.4

The CCC was established as a nonprofit agency in 1977 by publishers, authors, and users of photocopies in

response to the needs of businesses requiring the immediate use of information. It was designed to accelerate the

process of obtaining copyright permission while compensating copy-right owners for copies of their works.

The CCC operates two services: 1) the Transactional Reporting Service, where each organization keeps

track of how many copies are made of each work, and pays a license fee based on the number of transactions; and

2) the Annual Authorizations Service, a blanket license in which the company makes a single payment for

authorization to make limitless copies of the works covered by the CCC.

The Transactional Reporting Service is designed to serve the needs of smaller organizations that only occasionally make copies of copyrighted material. Users of this service are required to record the number of copies

made of specific works. Because users must record and report all copies made within the year, there are enormous administrative costs both in time and in effort.

The Annual Authorizations Service was established in 1983 in response to the needs of major U.S. corporations that reproduce substantial amounts of copyrighted material. The list of participants in this service has

grown to 75 and includes several large corporations. A license obtained through this service permits organizations to make as many copies of participating publications as needed without the administrative burden of having to record each transaction. Projected annual use is calculated from the surveys by using statistical models.

This service is currently the major source of payments to the CCC.

The licenses are granted for 1 year and are renewable for a second. The cost of the license is based on data

from copying surveys conducted at corporate sites. According to Eamon T. Fennessey (President, CCC) the cost

of these licenses can range from five to six figures.5 Corporations are limited to copying articles, journals, and

parts of books; the copying of an entire book is prohibited. Licenses are granted for copying publications that are

registered with the service and apply only to copies made for internal use.

Over 900,000 publications of approximately 6,200 publishers are currently registered with the CCC.6 By joining, a publisher designates the CCC to act as agent for those works that the publisher registers. No royalty can be

collected for the copying of a work not registered. The CCC is responsible for licensing a nonexclusive right to

corporations, handling license renewals, and processing publication additions, deletions, and fee changes. The

fees are stated by the publisher, who receives reports on billings and collections as well as on each participating

corporation’s projected use of the publisher’s works.

One stated goal of the CCC is to increase corporations’ awareness of copyright protection. The CCC is a

member of the International Federation of Reproduction Rights Organizations and shares rights agreements

with international organizations such as the Copyright Licensing Agency in England, Centre Francais du Copyright in France, and Copyright Agency Ltd. in Australia. It also has agreements with West Germany and Norway.

Continued on next page
universities and government bodies.

‘Material for this section is taken from: “Income from Copying, ” and “Publishers’ Executive Summary: Royalty Payments

Owed Under U.S. Law to Publishers World-Wide for Photocopying in U.S.A.)” pamphlets published by the Copyright Clearance Center, and Edwin McDowell, “Royalties from Photocopying Grow, ” New York Times. June 13, 1988.

2CCC reprewntative, ~rson~ communication, Apr. 28, 1989.

Witle 17, U.S. Code, Section 108.

“’publishers’ Executive Summary: Royalty Payments Owed Under U.S. Law to Publishers WorldWide for Photocopying in

the U. S.A.,” op. cit., footnote 1 above.

5Mc~we]], Op. Cit., f~tnote 1’

WCC representative, personal communication, April 28, 1989.

audiovisual productions and live perform- from the blank-tape levy itself amounted to

ances. The proceeds of this levy are paid to a

collecting society to be distributed among the

various copyright holders: authors receive

one-half of the proceeds from the audiotape

levy, with the performers and producers sharing the remaining half equally between them.

Proceeds from the videotape levy are distributed equally to all three parties.

Revenue from France’s blank-tape levy

boosted the gross income of the Societe des

Auteurs, Compositeurs, et Editeurs de

Musique (SACEM), the French authors’ society, by 9.5 percent to 1.84 billion francs

($305.9 million) in 1987.91 Of this amount,

1.23 billion francs ($203.6 million) were collected in performance income, an increase of

7.3 percent over 1986, and 615 million francs

($101.8 million) in mechanical income, up

14.3 percent from the previous year. Revenue

68.2 million francs ($1 1.28 million) of the mechanical rights income. Of the 1.84 billion

francs collected, 1.3 billion francs ($215 million) were distributed among approximately

50,000 authors, composers, and publishers for

the performance of about 450,000 works.

In 1988, France collected 400,860,313

francs ($63,377,125) from its blank-tape levy.

Of this amount, 103,185,757 ($16,313,954)

came from its audiotape levy.92

The recent addition of the blank-tape levy

was partially offset by the reduction of the

value-added taxes (VAT) on both prerecorded

and blank videocassettes and audiotapes.93

The recording industry believes that this reduction will result in less revenue for the copyright holders, which runs counter to the aim

behind the blank-tape levy. They feel that instead of focusing on the producers of blank

glThe fol]owlng is ~ken from Mike Hennessey, “Tape Levy Helps Lift SACEM Income,” Billboard, VO1. 100, No. 30, JUIY 23, 1988, p.

60.

92J. L. Tournler, president, SACEMJ’SDRM, letter to OTA, May 25, 1989 (enclosures 1-3: IF’PI ~bles).

93Mater1~ for this s-ion was ~ken from: Phi]ipp Crmq, “French TO Cut VAT Rates for Cassettes: Move AfTects prerecorded

Videos, Blank Audiotapes, ” Bilfboati, vol. 100, No. 43, Oct. 22, 1988, p. 91; and Philippe Crocq, “French VAT Cut on Prerecorded Vial:

Not All It Was Cracked Up to Be,” BiWmard, vol. 100, No. 49, Dee. 3, 1988, p. 53.
A bill was proposed in the 99th Congress, S. 1739,1to amend Title 17 of the U.S. Code with respect to home

audio recording and audio recording devices. If enacted, the Home Audio Recording Act would legalize the home

taping of copyrighted music in exchange for a modest levy on both the recording equipment and blank tapes. The

one-time levy would be imposed on equipment and blank-tape manufacturers and importers and would be distributed through the Copyright Royalty Tribunal to the appropriate copyright holders of the recorded materials.

Determination of the Royalty Rate: The Home Audio Recording Act would require manufacturers and

importers of recording equipment and blank audiotapes to pay a one-time levy per unit on the first sale or distribution of their product in the United States. The levy for audio recording devices would be set at 5 percent of the

price for the first domestic sale, 20 percent of the price charged for dual audio recording devices, and 1 cent per

minute of the maximum playing time or a fraction thereof in the case of blank media.

These fees would be subject to adjustment every 5 years, contingent on many different factors, among them,

the following

1.

2.

3.

4.

5.

the value to the individual of the right to reproduce copyrighted works;

the compensation that would have been received by the copyright holders if home copying were not possible;

the benefits derived by the consumers, manufacturers, and importers from the use and distribution of

these audio-recording devices or media;

the projected impact on both copyright owners and consumers, as well as the impact on the structure and

financial condition of the various industries involved; and

the relative roles of copyright owners, importers, and manufacturers with respect to creative and technological contribution to-the development-of sound recordings and musical works.

Other factors to be considered would include the objective of maximizing the creation of new sound recordings and musical works, reasonable estimates of the amount of audio recording devices or media not used for

infringing purposes, and the development of new technologies for making audio recordings for private use.

Because these factors would be constantly changing, it might be necessary to distinguish among different

kinds of audio recording devices or audio recording media and to establish different levies to ensure fair compensation to the copy-right holders.

Collection of the Royalties: The royalties from the levy would be collected by the Register of Copy-rights,

to be deposited into the Treasury of the United States after reasonable administrative costs had been deducted.

This pool of money would then be invested in interest-bearing U.S. securities, ultimately to be turned over to the

Copyright Royalty Tribunal for distribution.

Administration of the Royalty System: The monies collected from the compulsory license fee would be

distributed every year. The Copyright Tribunal would specify a 30-day period in which any person entitled to

receive part of the royalty would file a statement of account for the previous year. To be eligible to receive a share

of the royalty fees, the claimant would have to be the owner of the copyright of a musical work or sound recording

that was included in either radio or television transmissions, or distributed to the public in the form of

phonorecords or copies.

The claimants would then have to negotiate in good faith among themselves in an effort to reach a voluntary

agreement on the distribution of the royalties. A number of options could be exercised in the negotiations—

claimants might agree to the proportionate division of compulsory licensing fees among themselves, they might

consolidate their claims and file them jointly or as a single claim, or they might appoint a common agent to receive payment on their behalf.

The Tribunal would then have to determine whether a controversy existed among the claimants over the

distribution of the royalties. If no such controversy appeared to exist, the Tribunal would distribute all royalties,

less administrative costs, to the entitled copyright holders, or to their designated agents. If a controversy did exist, the Tribunal would conduct an evidentiary proceeding to determine how the royalties should be distributed.

All involved parties would be given the opportunity to present their views to the Tribunal. In the meantime, the

Tribunal would be allowed to distribute all fees that were not in contention, as long as it withheld an amount

sufficient to satisfy all claims still in dispute.

Continued on next page
collected from the implementation of this bill would then be shared among all others responsible for the creation

and production of a musical work on the basis of negotiated contractual agreements.

Proposal of the Music Community: The music community, consisting of record companies, songwriters,

music publishers, and performers developed a model for the sharing and distribution of the home-taping royalties generated by this bill, which they believed would be fair and reasonable to all parties involved. They argued

that their plan would ensure just compensation to those whose works were being reproduced without authorization and would provide incentives for the creation and dissemination of new musical works. To accomplish this

goal, they proposed that a Musical Arts Endowment be created for the benefit of aspiring songwriters, musicians,

and vocalists whose works have not yet been published or recorded. They also proposed that Creative Incentive

Grants be awarded to those whose recorded works had not yet achieved widespread popularity.

Distribution of the Royalties: The first step in the proposed distribution system, after the royalties had

been turned over to the Copyright Royalty Tribunal, would be to allocate 2 percent of the royalty pool to the Musical Arts Endowment to encourage and nurture new songwriters and recording artists, and to promote the development of new and experimental types of music. The money would be divided equally between The Songwriters

Guild Foundation (for lyricists and composers) and the National Endowment for the Arts (for aspiring vocalists

and musicians).

The remaining royalties would then be distributed among both copyright holders of the musical composition

and sound recording and the union organizations representing musicians and vocalists. First, 2 percent of the

royalties would be designated for funds to support musicians and vocalists (funds now in existence or to be established by the American Federation of Musicians (AFM) and the American Federation of Television and Radio

Artists (AFTRA). Of that 2 percent, 1 3/4 would be assigned to AFM funds and 1/4 assigned to AFTRA funds.

The remaining royalties would be divided between the two copyright pools. Twenty-three percent of the

royalties would be allotted to the Musical Composition Pool to be distributed among the lyricists, composers, and

publishers, and 75 percent of the royalties would be allotted to the Sound Recording Pool to be distributed among

the recording artists and record companies.

Each of these copyright pools would be further divided into separate funds–the airplay and record-sales

pools. An annual survey would be conducted to determine what proportion of the royalties would be used to compensate copy-right holders for their losses based on the amount of airplay a musical recording had received and for

the sales that the recording had enjoyed. The royalties would be divided between these two funds based on the

percentages dictated by the survey.

The airplay funds in both copyright pools would further be weighted to reflect the size of the audience.

Either ASCAP or BMI would be able to provide the necessary information to achieve the appropriate weights.

Both societies have developed their own formulas for distributing royalties to the appropriate copyright holders

for the public performances of live music and music performed over the radio or television.

The weighting of the record sales pool would take into account the different economic impact that home

taping would have if it displaced the sale of a front-line album as compared with the sale of a budget-line album.

To account for the differential in loss, weighting would be done based on the price category of the phonorecord.

The necessary pricing information could be obtained from record companies.

Of these royalties, 80 percent would be based on direct proportion and 20 percent on Creative Incentive

Grants. These grants would be awarded to those most in need of additional incentives. Creative Incentive Grants

would encourage the creation and dissemination of new musical works and would benefit creators, record companies, and music publishers. Eligibility for a Creative Incentive Grant would be determined on the basis of the

total previous payments made on a proportional basis from the royalty pools for each musical recording. Those

receiving the lowest percentage would be eligible for grants.

‘See U.S. Congress, Senate Judiciary Committee, Home Audio Recording Acts hearings before the Corn m ittee on the Judiciaryand its Subcommittee on Patents, Copyrights, and Trademarks, Serial No. J-99-69, Oct. 30,1985, Mar. 25 and Aug. 4, 1986.
prerecorded tapes, from 18 to 7 percent, so

that the recording industry can continue its

economic growth. It is estimated, however,

that a cut in the VAT rate on records and

prerecorded tapes would cost the government

$315 million a year in lost revenue.94

Officials from the French IFPI (International Federation of Phonographic Industries) group, Syndicat National de l’Edition

Phonographique (SNEP), also fear that tax

reductions for blank audiotapes could further

harm the recording industry, although they

believe the reduction for videotapes may help

spur sales of the new CD video format. A similar cut in VAT for recorded and prerecorded

tapes in December of 1987 has been generally

perceived as having helped revive the commercial record industry.95

Australia 96

Australia is the first English-speaking country to approve a blank-tape levy. After a decade of lobbying by the record industry, the

Australian Government imposed a blank-tape

levy on audiotapes and legalized home taping

of audio recordings. The Australian Government will not receive benefits from the levy,

nor will it be responsible for its administration. A nonprofit agency monitored by the

Australian Contemporary Music Development Co. has been established and a board of

directors, chosen from the entertainment industry, has been appointed to administer collection and distribution of the levy. The initial

pp

generated from the blank-tape royalty will be

used to fund the program.

Royalties will be distributed on the basis of

already existing systems designed to calculate

the amount of sales and airplay a particular

recording enjoys. The amount of the levy has

not yet been determined, but it is expected to

be in the range of 20 to 50 Australian cents for

each 60-minute cassette sold. Special exceptions will be made for groups and individuals

who will not be using blank tapes to copy

copyrighted music — groups such as schools

and institutes for the blind. The Australian

Record Industry Association estimates that

the levy will raise millions of dollars, but

much less than the 30 million Australian dollars per year that the recording industry

claims to lose because of home taping.97 Most

of the royalties will be distributed to Australian artists, although royalties will also be distributed to those countries that operate under

the same type of royalty system, including

West Germany and France. The United States

and England, although major suppliers of foreign music, will not be eligible to receive any

revenues since they do not have reciprocal arrangements with Australia.

Belgium98

In Belgium, a proposed levy on blank tapes

would be based on 8 percent of the retail price

of a blank tape. Revenues generated from this

levy would be divided into equal parts, with

Wrocq, “French To Cut VAT Rates for Cassettes: Move AfTects Prerecorded Videos, Blank Audiotapes,” op. cit., footnote 93, p. 91.

‘

s

Ibid.

96Materi~ for this s-ion is ~ken from: G]enn A. Baker, “Australian Cbv’t Approves Blank-Tape ~y~ty pl~~” B~l~~~ vol. 1~>

No. 24, June 11, 19S8, p. 76; and Debbie Krueger,‘

(OZ Imposes a Blank-Tape Levy Giving Royalties to Disk Artists, ’’Variety, vol.331,

No. 6, p. 84, June 1, 1988.

g7fi=r) op. cit., footnote @P. ‘.

*Materi~ for this ~tion is ~en from: Marc Maes, “Belgium Eyes Blank Tape LwY,” Billbcxd, vol. IQ No. 44, Od. 29, 19~, pp.

86,88.
going to the three language communities

(Flemish, French, and German), who would

use the money to support artists and cultural

institutions in each community. The proposal

also calls for an extension of the copyright period on author’s works from 50 to 70 years,

thereby enabling the three communities to

benefit from the additional 20 years.

Belgramex, the Belgium federation of artists and manufacturers, has welcomed the

proposals, but thinks that the levy should be

based on the actual playing time of the tape,

rather than the retail price. It would also like

to see a levy on recording equipment.

Belgramex believes that the revenues should

be used to compensate those that are harmed

(the manufacturers, artists, and authors)

rather than distributed to the three language

communities. It will be some time before new

legislation is drafted, if at all.

United Kingdom

In England, the new Copyright, Patent, and

Design Law of 1988 does not change the legality of home taping of copyrighted music, considered an infringement of copyright law.99

Nor does the law impose a levy or tax on blank

audiotape and videotape to compensate copyright owners for harms from home taping.100

The British Government’s decision not to support a blank-tape levy came 2 years after it

had, in a “white paper,” determined the imposition of a blank-tape levy to be the “best solu

The U.K. Trade and Industry Minister,

Kenneth Clarke, had argued that such a levy

would be both “wrong and indefensible, ’’lop

with the greatest weight falling unfairly on

consumers, especially on groups such as the

visually handicapped. He further argued that

the inequities placed on the consumer would

far outweigh any benefits resulting from the

levy, with those that are already financially

well-off receiving most of the benefits. In addition, he argued that administrative costs

would be high and the collection and distribution of the proceeds would require a new bureaucracy.

Support for a levy was voiced by such

groups as the British Music Copyright Reform Group (MCRG), the British record industry, and even the consumers themselves.

The results of a U.K. opinion poll, announced

on June 20, 1988 by the Music Copyright Reform Group, indicated that 60 percent of consumers regarded a 10-pence (18 cents) levy on

blank tape as the best solution to the hometaping problem, 15 percent supported a

spoiler device in prerecorded material, 2 percent favored prosecuting home tapers, and 23

percent had no opinion. The study also indicated that the more actively consumers are

engaged in home taping, the more likely they

are to support the royalty solution, which

would legitimize home taping.103

Some estimate that a home-taping royalty

would produce the equivalent of $12.25 million a year.104 According to one estimate, the

Whe following is taken from: Nick Robertshaw, “U.K Gov’t Rejects Home-Tape Levy,” Billbomd, vol. 100, No. 20, pp. 3, 84; and

“U.K Kills Tape Tax,” TVDigest, vol. 27, No. 44, Nov. 2, 1987, p. 15.

‘% ch. 3, pp. 35-38 for a more detailed description of the new copyright law.

loI ~&fiShaw, “lJ.K Gv’t Rejects Home-Tape Levy,” op. cit., footnote ~, P. 3.

102~id.

10qM1ke Hennessey, “UK Poll Shows Consumers Favor Blank Tape Levy,” Billboard, vol. 100, No. 27, July 2, 1988, p. 84.

104u.K Group Ur&s Home Taping ~w: Musiclms Join Major Drive to Win Over ~v’t, ” BilJ~~, V()]. 100, No. 10, MEU. b, 1!)88,

p. 4.
million of the blank tapes sold in 1987 were

used to copy copyrighted music.105 T h e

MCRG estimates that 2.5 times as much music is being copied as is being sold.106

Yet despite imputed home-taping losses,

statistics released in 1988 by the British Phonographic Industry show that the recording

industry is enjoying substantial growth and

that the LP business is actually enjoying a resurgence. The sales value of shipments of U.K.

recordings rose 23 percent to $1.04 billion

overall, with album sales rising 27 percent to

$887.7 million, CD sales up 75 percent to

$238.9 million, and cassette sales rising 24

percent to $365.7 million.107

Hopes were revived for a levy on May 24,

1988, when members of a parliamentary committee voted 12-10 in favor of an amendment

empowering the government to introduce the

controversial levy.108 However, the House of

by a vote of 134 to 37.The MCRG then took

its fight for a levy to the European Economic

Community (EEC), with the aim of lobbying

the EEC to adopt the levysolution.110 But the

EEC, in a “green paper,” decided instead that

each government should follow its own views

on the issue.111

Canada

112

The Canadian Government recently

placed its 1924 Copyright Act with a new

react

that grants artists the right to control their

works and extends copyright protection to

computer programs as well.113 The Copyright

Act of 1924 contained provisions for a “compulsory” license, whereby recording companies could automatically obtain the right to

record any song made and sold in Canada simply by paying a statutory royalty of 2 cents per

playing surface.

IO~Nick ~~~shaw,~oting Simon Coombs, Conservative Parliament Member, “U.K Cbv’t Rejects Home-Tape LevY, ” op. cit.,

footnote 99, p. 3.

1~’’U.K Group Urges Home TapingLeW: MusiciansJoin Mqjor Drive to Win Over Gov’t,’’Z3iMoc@ vol. 100, No. IO, March 5,1988,

p. 4.

IOTPeter Jones, “U,K Sales ~]ie Dire pr~i~ions: Despite Problems, Music Biz Shows Growth, ’’BiUboati, VOI. 100, No. 22, May 28,

1988, pp. 1,83.

‘mNick Robertshaw, “Hopes Revived for U.K Tape Levy,” Bilhxmd, vol. 100, No. 24, June 11, 1988, p. 76.

IOgMike Hennessey, “U.K Commons mj~ts Tape Levy: IFPI Decries ‘Moral Injustice’, ” Billboard, vol. 100, No. 31, Aug. 6, 1988, p.

3.

1 I o Jeremy CooPrnan, “Two Setbacks Hit U.K Struggle for Blank Tape Levies, ” Variety, vol. 332, No. 5, Aug. 24, 1988, p. 104.

11 lcommission of the EuroPm Communities, Green Paper on Copyright and the Challenge of Technology — Copyright Issues Requiring Immediate Action, COM (88) 172 final, Brussels, June 7, 1988.

1 lzMateri~ for this ~tion is incorWrat~ from: Earl Green, “Canada at Long Last is Replacing Copyright Act around since 1924, ”

Variety, vol. 331, No. 8, June 15, 1988, p. 31; Kirk LaPointe, “Canada Passes Copyright Reforms, ’’BiWoati, vol. 100, No. 24, June 11,

1988, pp. 1, 78; Kirk LaPointe, “Commons: ‘No More Delay’ – Reform Bill Returns to Senate, ’’BiUboaml, vol. 100, No. 22, May 28,1988,

p. 75; Kirk LaPointe, “Copyright Act Opens Door for New Mechanical Rates,” Billboard, vol. 100, No. 26, June 25, 1988, p. 71; Kirk

LaPointe, “New Elections Kill Broadcast Plan: Deal to Scrap Tariffs on Hold,” Billboum2, vol. 100, No. 42, Oct. 15, 1988, p. 72; Kirk

La.Pointe, “Senate Blasted for Copyright Stand: CRIA Head Decries ‘Cultural Assassins’,” Billboard, vol. 100, No. 21, May 21, 1988, p.

66; Kirk La.Pointe, “Senate Digs In: Showdown May Loom on Copyright Bill,” Bilfboati, vol. 100, No. 12 Mar. 19, 1988, p. 84; Kirk

LaPointe, “Senate: ‘No Deal on Copyright Bill’ –Reform Advocates Suffer Major Setback, ’’BiUboaml, vol. 100, No, 20, May 14, 1988, p.

70; Kirk LaPointe, “Senate Softens on Copyright Amendment Issue,” Billboaml, vol. 100, No. 23, June 4, 1988, p. 58; Chris Morris,

“Canada Nears Mechanical Rates, ” Billboatd, vol. 100, No. 30, July 23, 1988, pp. 1, 76; OTA stafTinterview with and materials received

from the Canadian Musical Reproduction Rights Agency Ltd.

11 swCh. 3, pp. 3M9 for a detailed description of the new copyright law.
stipulated by them, or to refuse to issue a mechanical license. The new act also provides a

system to help writers and publishers negotiate and collect copyright fees. The 2-cent-asong compulsory license has been abolished,

giving creators and record companies the opportunity to negotiate new rates that are in

line with rates in other countries.114

In addition, the new Copyright Act provides

harsher penalties for copyright infringement.

The previous maximum penalty was a $200

fine. It is now set at $25,000 and 6 months in

jail on summary indictment and $1,000,000

and 5 years in jail upon conviction on indictment.

The second installment of copyright legislation is expected to deal with the home copying

of records, videotapes, and computer programs, the distribution of royalties from

video rentals, cable fees for retransmission,

and copyright protection for computer chips.

The recording industry, arguing that home

taping has deprived them of millions of dollars in revenues, has fought long and hard for

revisions to the old Copyright Act. The results

of a recent consumer survey commissioned by

the Music Copyright Action Group, which includes the country’s leading trade organizations, indicate that home-taping losses to the

recording industry may exceed $600 million

(Canadian) or 68 million in unit album

sdes.115 previous studies estimated losses between $50 million and $100 million.116 In this

first-ever consumer survey by the music busi

tions that averaged about 14 minutes. The

findings revealed not only high incidence of

home taping (63 percent of those surveyed in

the 15 to 54 age group had made a home tape

within the previous year), but also strong support for compensation to the copyright owner

for income lost due to home taping, with the

heaviest tapers favoring a blank-tape levy.

Despite these estimated losses, the Canadian recording industry has enjoyed its fifth

straight year of revenue growth. The results of

a Statistics Canada study117 show that in the

year ending March 1987, both Canadian imports and exports had increased substantially

and the industry experienced a 10.5 percent

increase in revenues, despite a decline in the

market share of albums, from 78 to 31 percent, with a slight rise in the market share for

cassettes. CD sales tripled from 4

cent, providing the major boost in

Other Countries118

Hungary. – Hungary imposed

to 12 perrevenues.

a levy on

blank tapes in 1983 that amounts to 8 percent

of the selling price of a blank tape. Revenues

from the levy system are distributed among

the copyright holders of recordings, with 50

percent going to the authors, 30 percent to the

performers, and 20 percent going to the producers of audio recordings. In the case of

video recordings, 70 percent is distributed to

the authors and 30 percent to the performers.

The performers’ shares are not individually

I I d~er months of neWtiatlon, the new rnechanic~ rates (in effect until October 1990) were f~ed at 5.25 Canadian cents per track

for all records sold after Oct. 1, 1988, regardless of when the record was released. Extended works of more than 5 minutes will receive

1.05 cents for each additional minute or fraction thereof.

11 scanadi~ Independent Record production Association (CIRPA), A Study On Home Taping, prepred on ~half of The Music

Copyright Action Group, ISBN 0-921777-02-7, 1987.

1 IS& ~rk ~Ointe, “Canada Study: Copying IS Rampant,” Bdlboaml, VO]. 100, No. 12, Mar. 19, 1988, pp. 1, 106.

1 T 7~rk ~olnte, ~~stats Canada Sumeys 8&87 Music Wene: Rewlrt ReVea]s over~} Strengthening of Industry, ” Billbocmi, VO]. 100,

No. 31, Ju]y 30, 1988, p. 62.

1 18Materia] fc)r this s=tjon taken from: Yvonne Burckhardt, “Legislation on private Copying in Europe and Its Implementation, ’

and Yvonne Burckharrlt, “’New’ Rights of Performers, ” op. cit., footnote ’90.
Authors Rights collects the revenues from

the levy and then transfers the amount due

performers to the Association of Hungarian

Art Workers’ Unions, which distributes the

funds. The purpose of the Association is to

provide support to the profession, to performers of all ages, and to sponsor study trips,

scholarships, festivals, etc.

Iceland. 120– Iceland introduced a levy on

blank audiotapes and videotapes, as well as on

recording equipment in 1984. The levy was set

at 10 Icelandic Kronen (19 cents) for

audiotapes and 30 Icelandic Kronen (57 cents)

for videotapes. The recording equipment is

levied at four percent of the import price or

the manufacturing price. Eighty-five percent

of the total revenue collected is distributed;

the remaining 15 percent is put into a cultural

fund supervised by the Ministry of Education.

The proceeds from the audiotape levy are collected by one body, and distributed to the performing artists and producers (46 percent),

music authors (46 percent), and lyric writers

(8 percent). The performers’ share is deposited into a fund for the promotion of the profession, particularly for music schools.121

West Germany. – West Germany has a levy

on blank tapes in addition to one on recording

equipment. Erich Schulze, President and

General Manager of Gesellschaft fur

musikalische Auffuhrungs - und mechanische

Vervielfaltigungsrechte (GEMA), has commented that the introduction of a blank-tape

levy has not had a negative impact on the

competitive situation of West German or foreign tape manufacturers. On the contrary, he

siderably. 

The levy is set at 2.50 Deutsche marks

($1.35) for audio recording equipment, 18 DM

($9.78) for video equipment, .12 DM (6 cents)

per hour of recording time for audiocassettes,

and .17 DM (9 cents) per hour of recording

time for videocassettes. Revenues from this

system, which took effect July 1, 1985, are distributed among the various collection societies for music authors (42 percent), performers and producers (42 percent), and lyric

authors (16 percent). Gesellschaft zur Verwertung von Leistungsschutzrethten (GVL), the

performance rights society, distributes the

proceeds according to the same scheme used

for the distribution of revenues from the

broadcasting of commercial records, with the

performers receiving 64 percent of the share

and the producers receiving the remaining 36

percent.

In 1985, West Germany collected 50 million

DM ($27,174,000),16 million DM ($8,695,000)

of it in the audio field and 34 million DM

($18,000,000) of it in the video field. Of this

amount, the performing rights society received 3.9 million DM ($2.1 million) from its

audio recording equipment levy, and 2.4 million DM ($1.3 million) from its blankaudiotape levy. In addition, GVL received 4.5

million DM ($2.4 million) from its video

equipment levy, and 2.1 million DM ($1.1 million) from its blank-videotape levy. Of this

amount, the performers received 64 percent

and the producers 36 percent, which resulted

in 8.2 million DM ($4.4 million) being distributed among the performers.123

I IgJ. L. Tournier, op. cit., footnote 92, table 2.

‘~he following section is taken from J.L. Tournier, op. cit., footnote 92, table 2.

121yvonne Burcfiwdt,~~~~~]ationon privateCopfinginEurop~dIts Imp]emen~tion, ’ op. cit., footnote ~, p. 10.

lzzErich &-hu]ze, president and General Manager, GEMA, letter to 0’I’A, June 7, 1989.

1 z~vonne BUrcW~t, ~t~~s]ation on private Copfing in Europe ~d Its 1mp]emen~tion, ’ op. cit., footnote W, pp. 5-6.
tape revenues; 28,600,000 DM ($15,318,693)

in the audio field.124

Sweden. – Sweden, unlike the other countries discussed above, has introduced a tax

system on blank tapes, in which the revenues

collected from the tax go to the government,

which decides what to do with the funds. The

rate is set at 1.50 SKr (23 cents) per audiotape,

and 15.00 Skr ($2.35) per Videotape. 125 Twothirds of the revenues collected are used for

unspecified purposes; 80 percent of the remaining one-third is put into a cultural fund

and the remaining 20 percent divided among

the author (40 percent), performer (30 percent) and the producer (30 percent). The revenues due the performer are transferred to the

performers’ collection society (SAMI), which

deducts half for administration costs and divides the other half according to the same

scheme used for distributing revenues from

the broadcasting of records. This leaves the

performer with a relatively small share of the

pg y

SAMI collected 900,000 SKr ($154,800) from

its tape tax, half of which was used for collective purposes and the rest distributed individually to performers.126 From June 1987 to

June 1988, Sweden collected 130,000)000 SKr

($20,300,000) from its blank-tape tax. Of this

amount, 3,000,000 SKr ($470,000) was distributed to rights holders in the music field,

and 848,000 SKr ($132,700) to producers of

phonograms. The state retained 127,000,000

SKr (19)830,000) as fiscal revenue.127 The International Federation of Phonographic Industries notes that the amount distributed to

right owners has remained unchanged for the

past three years, while the total revenue collected has increased substantially.128

Tables 5-1,5-2, and 5-3 summarize the legislation and implementation of levies and

taxes on private copying in Australia, Austria,

Finland, France, West Germany, Hungary,

Iceland, Norway, Portugal, Spain, and Sweden.

124J. L. Tollrn icr, op. cit., footnote 92, table 2.

‘251hid., table 3.

I z~vrjnne BU rckh~r(]t, “Legislation On Private Copying In Europe and Its Implementation, ” op. cit., footnote ~, P. 12.

IZ7J. L, Tounier, op. cit., footnote 92, table 3.

128~1~ .
Australia Copyright Amendment Blank audio tape: Not yet decided Producers of phonograms

Act 1989 Authors

Austria Law No. 321 of Blank audio tape: AS 1.60/h (USD 0.12) Producers audio/video

2 July 1980 Special rate:AS 2.40/h (USD 0.18), Authors

when no contract Performers

Blank video tape: AS 2.56/h (USD 0.19)

Special rate:AS 3.85/h (USD 0.29),

when no contract.

Finland Law No. 442 of Blank audio tape: FM 1.8/h (USD 0.41) Authors

8 June 1984 FM 0.03/min

Blank video tape: FM 3.6/h (USD 0.82) Performers

FM 0.06/min

Producers audio/video

France Law No. 85-660 of Blank audio tape: FF 1.5/h (USD 0.24) Authors

3 July 1985 Blank video tape: FF 2.25/h (USD 0.36) Performers

Producers audio/video

Germany 1965 Copyright Law, Blank audio tape: DM 0.12/h (USD 0.06) Authors

(Federal as amended Blank video tape: DM 0.17/h (USD 0.09) Performers

Republic) 23 May 1985 Audio hardware: DM 2.50 per item (USD 1.34) Producers audio/video

Video hardware DM 18.00 per item (USD 9.64)

Hungary Decree No. 15 of Blank audio tape: 8% of sale price Authors

20 November 1982 Blank video tape: 8% of sale price Performers

Producers audio/video

Iceland LAw No. 78/1984 of Blank audio tape: IK 10 per piece (USD 0.19) Authors

30 May 1984 Blank video tape: IK 30 per piece (USD 0.57) Performers

Audio hardware: 4% of sale price Producers audio/video

Video hardware: 4% of sale price

Portugal Law No. 45/85 of Blank audio tape: to be decided Authors

17 September 1985 Blank video tape: Performers

Audio hardware: Producers audio/video

Video hardware:

Spain Law No. 22/1987 Blank audio tape: to be decided Authors

November 1987 Blank video tape: Performers

Decree of 21 March 1989 Audio hardware: Producers audio/video

Video hardware:

NOTE: Exchange Rates at 13 March 1989

SOURCE: IFPI data provided by International Federation of Musicians, July 1989
Table 5-2.-Taxation on Private Copying

Amount retained

Total Revenue Amount distributed by State as

Country Date of law Basis of tax Rate of tax collected to right owners fiscal revenue

Norway LaW No 74 entered Blank audio tape: NOK 3.00 per tape

into force on (USD 0.44)

1 January 1982 Blank and

pre-recorded video

tapes: NOK 15.00 per tape

(USD 2.21)

Recording equipment:

(audio/video) N/A

1988 tape levy

NOK 45,000,000 NOK 25,000,000 NOK 15,000,000

(USD 6,621 ,900) (USD 3,679,180) (USD 2,207,500)

(NOK 4,000,000 or

USD 588,600 for

producers of phonograms)

Hardware: audio/video

NOK 65,000,000 Nil NOK 65,000,000

(USD 9,585,000) (USD 9,565,000)

Sweden* Law of 24 June 1982 Blank audio tape: SK 1.50 per tape June 87/June 88

(came into force (USD 0.23) SK 130,000,000 SK 3,000,000 SK 127,000,000

1 July 1982) Blank and (USD 20,300,000) (USD 470,000) (USD 19,830,000)

pre-recorded video SK 15.00 per tape to right owners in

tapes: (USD 2.35) the music field

including SK 848,000

(USD 132,700) to

producers of phonograms

NOTE. *It should be noted that the amount distributed to right owners has remained unchanged for the past three years whereas the total revenue collected by the State has increased substantially

Exchange rates at 13 March 1989

SOURCE: IFPI data provided by International Federation of Musicians, July 1989
1/3 authors

(producers have agreed to give 1/3 to

performers)

Austria 1988 Audio

Local currency 17% producers of phonograms (LSG)

Audio: AS 23,254,287 17% performers (recorded performances) (LSG)

(USD 1,771,080) 3% performers (OSTIG - live performances) 51% of the total

63% authors (49% Austro-Mechana, 14% Literar remuneration must be used

Mechana & VG Rundfunk) for social and cultural

purposes by collecting

societies.

Video: AS 83,113,315 Video

(USD 6,330,032) 4% audio producers and performers (LSG)

3.9% performers (OSTIG - VBK)

14.8% authors (literary works)

Total: AS 106,637,602 28.7% authors (musical works)

(USD 8,101,1 12) 22.8% film/video producers

25.8% broadcasters (VG Rundfunk)

Finland 1987

(1/3 of total income distributed) 66% Cultural Fund for the

Audio: FM 13,937,813 Audio promotion of national

(USD 3,198,946) 25.5% producers of phonograms cultural investment in

25.5% performers Finnish phonograms and

44% authors (musical works) video productions.

5% writers and publishers

Video: FM 30,606,371 Video

(USD 7,070,513) 12.8% authors (musical works)

3.2% producers of phonograms

6% recording artists

Total: FM 44,744,184 30% actors/choreographers/dancers

(USD 10,269,478) 6% directors

12% authors (literary works)

30% journalists/interpreters/scenery and costume

designers and cameramen

France 1988 (75% of income distributed to individual right The collecting societies

owners) must use 25% of revenue for

Audio: FF 103,165,757 Audio the promotion of audio/

(USD 16,313,954) 50% authors/publishers of musical works audiovisual productions

25% performers and live performances.

25% producers of phonograms

Video: FF 297,674,556 Video

(USD 47,063,171) 33% authors

33% performers

Total: FF 400,660,313 33% video/film producers

(USD 63,377,125)
Germany 1987 Audio None by law but the

(Federal Audio: DM 28,600,000 42% authors/publishers of musical works (GEMA) collecting societies

Republic) (USD 15,318,693) 269% performers (GVL) provide cultural funds

15 1% producers of phonograms and social welfare

16% authors of literary works (VG WORT) schemes

Video: DM 64,900,000 Video

(USD 34,761 ,650) 21% authors/publishers of musical works (GEMA)

134% performers (GVL)

7.6% producers of phonograms (GVL)

Total: DM 93,500,000 8% authors of literary works (VG WORT)

(USD 50,080,343) 50% film/video authors and producers

Hungary Audio: FT 22,000,000 Audio The share to performers

(USD 405,400) 20% record producers (Hungaraton) must be used for social

30% performers purposes and not for

50% authors individual distribution.

Video: N/A Video

70% authors and other copyright owners

30% performers

Iceland N/A (85% of total revenue is distributed)

Audio 15% Cultural Fund

23% producers of phonograms supervised by the Ministry

23% performers of education

46% authors (musical works)

8% authors (literary works)

Video

Not available

Spain Not yet implemented (80% of total revenue is distributed) 20% Cultural Fund

to right owners)

Audio

40% authors

30% producers of phonograms

30% performers

Video

40% authors

30% producers of videograms

30% performer

NOTE: Exchange Rates at 13 March 1989

SOURCE IFPI data provided by International Federation of Musicians, July 1989
Chapter 6

The OTA Survey
Page

WHY DO AN OTA SURVEY? ● .*** ..* b**. *..9 ***0 ***0..0....*..*.**. 139

Recency of Surveys ..** ...   ** **   ** **  , ** . ..*. a m....*.*. 139

Biases and Lack of Comparability of Previous Studies . . . . . . . . . . . . . . . 141

Data Not Available for Examination ... *.** *.. .*. ..*. m ****m***.**. 142

Narrowness of Focus ●   ** . .**. **** *.990 **** **.9 *.. * a *****..** 142

GOALS OF THE OTA SURVEY .* O*. s *e**.***.*.*****.**,.**.*.***.. 143

DESCRIPTION OF THE FINAL QUESTIONNAIRE . . . . . . . . . . . . . . . . . . . 144

Study Population, Design, and Sampling .*. . * 6 *, * . . . . . . . . . . . . . . . . . 144

The Field Period ● **. .9m9*** .*** *0**   ... ** ****089***********. 145

SUMMARY OF SURVEY FINDINGS ● **** ..*9. ,**=*** .0 m**..**.**,*, 145

MUSIC LISTENING IN AMERICA ... ... .,. ... ... ... ... .,. ... ... ..b. 147

CONSUMER AUDIO TECHNOLOGY ● **. .*. . e*********.*.**,,*,**** 147

THE MARKET FOR PRERECORDED MUSIC . . . . . . . . . . . . . . . . . . . . . . . . 148

MOST RECENT MUSIC PURCHASE EXPERIENCE . . . . . . . . . . . . . ● . . . . 148

Projection of Music Purchases b.. ..oo. ... ... ... ... ... ... ... ... .o. 148

MOST RECENT LISTENING EXPERIENCE . . . . . . . . . . . . . . . . . . . . . . . . . 149

Homemade Recordings in the Most Recent Listening . . . . . . . . . . . . . . . . 150

PREVALENCE OF HOME TAPING ● * * . * . * * * . * * * . . . . . . . . . . * ..****.** 151

Home Taping From Broadcast Formats ● * * 0 * * * * * * . . . * * * * . *****...* 152

Home Taping From Prerecorded Formats . . . . . . . . . . . . . . . . . . . . . . . . . 153

Total Taping Estimate . . . * . . * * * . . * * * * * * * * * . . * . * . . * . * . * * *.*....*. 153

PROFILE OF THE HOME TAPER ... *.*, *m***.***....*.*.....**.*. . 154

Album v. Selection Taping . **O*.******.***..***.**.........**** , 155

Source of Copy: Recording Format ● *m*. *.*. 9*. ***. *. ***.0.***.*., 156

Source of Original: Own v. Others’ ● *.m, *.** *.. ... .*a***. . *a***..* . 156

Permanence of Tape Libraries ● *..0*.***.*****.*..******..***.*.. 156

Reasons for Taping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

COPYING AND THE RECORDED MUSIC MARKET . . . . . . . . . . . . . . . . . . 167

Sales Displacement of Home Taping .. b, . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Stimulative Effects of Taping .. Oo. .0. o.o*. **** ***. **** . * *o***.... 159

Recording of Noncopyrighted Material b . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

Taping Technology and the Home-Tape Inventory ● .**. * * * o **..*..*. 160

HOME VIDEOTAPING ● .*** *.. **** ...   ** ** **** ... .*. am...**,** . 161

Videotape Copying ● 8***   ** **   ** 0* ***e *.*.99*****..*.*.*** 162

Comparison of Video- and Audiotaping Behaviors . . . . . . . . . . . . . . . . . . . 162

PUBLIC ATTITUDES .**. e.*. ... **** ..o. *,*o. o,, *o. .o. ,, o .***.,... 163

Attitudes Toward Taping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Fairness of Taping ● ... .*. ..*m*** ... .. *****..0***.***...*....** . 164

Attitudes Toward Policy Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

Tables

Table Page

6-1. Surveys on Home Audiotaping ● *b****...**********.*..*,..***.* 140

6-2. Projected Purchasing/Taping Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Very early in the study it was clear that OTA

needed its own survey of home taping and

copying behavior. A number of previous surveys of taping behavior had been performed,

but they did not meet OTA’s needs in developing and discussing policy options for Congress.

The authors of a previous OTA study, Intellectual Property Rights in an Age of Electronics and Information, noted the need for a new

survey. In its brief review of surveys of taping

behavior, the report noted that “[existing

surveys vary considerably, and rapid changes

in technologies and use make previous surveys of harm increasingly less relevant. Conducted by parties involved in the intellectual

property debate, most of the surveys that are

available are, moreover, subject to bias.”1 A

congressional request letter for the home

copying study2 cited the above passage to support the need for a new survey.

A review of the earlier surveys at the beginning of this project confirmed the view that

they were not a suitable basis for a congressional policy study. Briefly, there were four

problems.

First, several years had passed since the

most recent surveys of home-taping behavior,

and the current rate of technological change

may have rendered their results less than useful.

Second, most previous surveys were performed by the electronics industry and the recording industry groups, or by other organizations that were parties to the home-copying

sionally prepared surveys, they nevertheless

reflected fundamental biases, as will be discussed later. Further, the surveys were very

different in methodology so that their results

could not be compared.

Third, in many cases, the published reports

on these surveys were incomplete. Often the

precise wording of questions, specific details

on the sampling plan, or other data were not

available for examination.

Finally, the OTA assessment needed a

broader empirical focus than previous studies

offered. Earlier studies had focused only on

one medium, usually audiotaping. To provide

a context for policy options, OTA needed some

comparable information on different types of

copying and on possible similarities and differences in behavior. In addition, OTA needed

information on public perceptions of and

opinions on various policy alternatives, preferably from the same population.

Recency of Surveys

The age of the surveys was probably the

least important of the objections, but it was

still a troubling one. Technology has been

changing rapidly; new products have been entering the market place, and their availability

has given consumers new options in their purchasing and copying behavior.

A number of surveys of home audiotaping

behavior were conducted in the late 1970s and

early 1980s. (See table 6-1 for a summary of

previous surveys of home taping reviewed by

OTA.) The most recent major survey was

IU.S. Conmess, Offlce of T~hn~]o~ Assessment, Intellectual Proper@ Rights in an Age of Electronics and Znfomation, OTACIT-302 (Melbourne, FL: Kreiger Publishing Co,, April 1986), p. 201.

z~tter from ~natr)r ~nnis w Concin i, Chairman, Senate Subcommittee on Patents, Copyrights and Trademarks, ~d ~presentative Ftobert W. Kastenmeier, Chairman, House Subcommittee on Courts, Civil Liberties and the Administration of Justice to Mr.

Frederick Weingarten, Oftlce of TechnoloW Assessment, May 8, 1987, p. 2.

139
The Prerecorded Music

Market: An Industry Survey

A Study on Tape Recording

Practices among the

General Public

A Survey of Households

with Tape Playback

Equipment

Blank Tape Buyers: Their

Attitudes and Impact on

Prerecorded Music Sales

Home Taping: A Consumer

Survey

1981 Estimate of Loss Due

to Home Taping: Tapers

Reports of Replacement

Why Americans Tape: A

Survey of Home Audiotaping

in the U.S.

Home Taping in America:

1983 Extent and Impact

Warner Communications Inc.

Recording Industry Assn. of

America/National Music

Publisher’s Assn.

Copyright Royalty Tribunal

CBS Records

Warner Communications, Inc.

Warner Communications, Inc.

Audio Recording Rights

Coalition

Recording Industry Assn. of

America

National Analysts,

Div of Booz, Allen

Hamilton & Co.

The Roper

Organization

William R. Hamilton

& staff

CBS Records Market

Research

National Analysts,

Div. of Booz, Allen

Hamilton & Co.

WCI Consumer Research

Yankelovich, Skelly &

White, Inc.

Audits and Surveys

1978

1979

1979

1979-80

198(-82

1981-82

1982

1983

3,385 personal

interviews

2,004 adults plus

131 10 to 17 year

olds; telephone

interviews

1,539 telephone

interviews, aged 14

and over

7,500 telephone

interviews; 1,000

mail interviews;

1,000 in-store

interviews – all

record & tape buyers

2,370 face-to-face

interviews

3,264 mail interviews

with diary, aged 10

and above

1,018 telephone

interviews with

persons aged 14 and

over who had taped

in past 2 years

1,354 mail interviews

and diaries; 589

personal interviews

and tape audits

SOURCE: Office of Technology Assessment, 1989

published in 1983 for the Recording Industry consumer attitudes toward copying behavior

Association of America (RIAA).3 Thus, most and possible policy alternatives (e.g., the acstudies were completed before the wide avail- ceptability of a tape levy to offset losses due to

ability of portable walkabout tape players and copying) was published in 1979 by the Copycompact disc players, technologies that are right Royalty Tribunal.4 It is likely that there

having a profound effect on home entertain- have been changes in attitudes and opinions

ment. The most recent survey that included since that time,

aAUditS ~d suneys, Home l’aping in America: 1983, Extent and Impact, report prepared for ~,New yorh NY, lg~.

‘Copyright Royalty Tribunal, A Survey of Households with Tape Playback Equipment, Washington, DC, September 1979.
Table 6-1 shows that most of the institutional sponsors of previous surveys of home

taping were stakeholders in the home-copying

debate. Such sponsorship does not necessarily

produce a biased study. A study that was produced for advocacy purposes is immediately

suspect, however, and if complete data are not

available for examination, such suspicions

cannot be put to rest. While most of the surveys were performed by experienced survey

research firms that used generally accepted

survey and statistical techniques, biases could

still arise in the wording of questions, choices

of measures, or selection of questions to be

asked.

Previous surveys have used various methodologies and measures of taping activities.

Survey methodologies have ranged from faceto-face interviews to audits (actually counting

tapes and records owned) to mail surveys to

telephone interviews, as shown in table 6-1. To

measure taping activities, some surveys have

used the “number of tapes” purchased or

used,

6 others the “instances of taping,”7 and

still others the “number of pieces of music

copied.” 8

In addition, some questionnaires

asked about taping activities in general, while

others focused on one specific instance of taping. The populations varied as well, with some

surveys interviewing the general public, some

interviewing only people who made home

tapes, and some focusing on people who frequented record stores.

was extremely difficult to resolve differences

among survey results. For example, Why

Americans Tape, commissioned by the Audio

Recording Rights Coalition found that home

audio recording stimulated sales of prerecorded material. This was based on a large

number of positive responses to questions

such as, “Have you ever discovered that you

like performers or composers as the result of

taping one of his or her albums from a borrowed recording?” and “Has this ever led you

to buy a record or prerecorded tape of this

performer or composer?”9 On the other hand,

Home Taping in America, commissioned by

the RIAA, found that taping did not stimulate

sales. In personal interviews, subjects were

asked, “Thinking of the (record/tape) you

bought most recently, which of the following

reasons on this card, if any, best describe why

you bought it?” Of nine suggested reasons,

only a small number of respondents selected

“heard other music by artist/group on a

home-recorded tape” or “heard a home-recorded tape of it.”10 Thus, it was clear that

raising the question in different ways could

elicit very different answers. While it can

sometimes be argued that one formulation of

a question is “better” than another in an objective sense, the choice of a “better” formulation is often a matter of opinion that will be

influenced by the motivations of the survey

sponsors and the expected uses of the survey

results.

‘For example, see CBS Records Market Research, Blank Tape Buyers: Their Attitudes and Impact on Prerecorded Music Sales, 1980.

‘Audits and Surveys, op. cit., footnote 3.

‘Copyright Royalty Tribunal, op. cit., footnote 4.

8The ~Fr Orwization, A Study on Tape Recording practices of the Genemt’ Public, June, 1979.

Wankelovich, Skelly, and White, Inc., Why Americans Tape: A Survey ofHome Audiotapzng in the United States, report prepared for

the Audio Recording Rights Coalition, September 1982.

1 ~Audlts and Surveys, op. cit., fOOtnOte ~.
Different measures and different forms of

questions made it difficult for OTA to use previous studies for purposes of comparison in

developing its policy analysis.

More problematic, however, was the fact

that many of the previous surveys’ data were

not available for detailed analysis, or for independent replication. In some cases, it was not

possible to determine the exact wording of

questions or instructions to respondents. For

example, the survey completed by Audits and

Surveys for the RIAA

11 examined the taping

behavior of several hundred people who maintained taping diaries during a month of 1983.

The report on the survey did not, however,

elaborate on the instructions given to respondents or the criteria they were to use in classifying their reported behaviors. In addition, a

1980 report by CBS Records Market Research

indicated that blank tape purchasers ’primarily tape to make custom tapes and to save

money,” but did not indicate the precise questions used to elicit these results.12 Similarly,

the report was based on the results of three

separate surveys, but did not indicate how

they were combined to produce a single result.

Reports on some other surveys did provide

exact wording for the questions reported. It

was not always clear, however, that all questions were reported, nor was it possible to obtain responses to the questions that were not

reported. Thus, OTA could not use the results

of the previous surveys, except to note general

trends.

The OTA report will occasionally refer to

previous surveys and compare the results of

the 1988 OTA survey with some previous

study, but this must be done with caution,

Narrowness of Focus

Most previous work focused on one particular type of copying. The surveys in table 6-1,

for example, deal only with audiotaping behavior. Some of these studies had been remarkably detailed as they intensively explored such topics as the amount of time

spent making audiotapes, the numbers of

tapes used, the types of music copied, the

numbers of pieces of music recorded per tape,

etc. The survey sponsors often considered

such detailed data necessary both to understand their markets thoroughly and to support partisan positions, such as claims of economic harm to the recording industry.

However, this wealth of detail would be of little help to Congress in understanding how

audio taping fits into the general pattern of

home taping and copying.

A more general understanding of this pattern would be very useful in developing policy

alternatives. It would be helpful to understand, for example, whether people who

audiotape frequently also videotape frequently. Is there some specific group of people

who consistently make home copies of copyrighted material of every type? Or are the users of audiotapes, videotapes, and computer

copies different groups of people with different sets of motivations and incentives? Previous studies were not helpful in answering

these questions.

Similarly, few of the previous surveys

closely coupled a study of taping or copying

behavior with attitudes about intellectual

property. They would thus be of little help in

determining which kinds of home copying activities tended to violate contemporary AmerI IAuditS and Suweys, op. Cit., footnote 3.

12cF3s &COrdS Market Research, op. cit., footnote 5, P 11.
those of people who did not make copies.

Given the rapidity of technological change

and the blurring of boundaries between different copying technologies, Congress may want

the option of dealing with home copying in a

general way, rather than on a piecemeal basis.

This necessitates some grasp of the general

pattern of taping and copying. Similarly, Congress may want to understand differences, if

any, between copiers and the rest of the population, before selecting a policy alternative.

GOALS OF THE OTA SURVEY

OTA had some specific goals in developing

this survey. They met with varying degrees of

success.

The first goal was to manage the problem of

bias. OTA recognized from the outset that it

would be impossible to eliminate all bias from

its own survey. The objectives here were more

modest. The first was to minimize bias to the

extent possible by avoiding some of the problems observed in previous studies. Second,

and more important, was to use an open process for developing the survey approach and

the survey instrument. In this way, areas of

unavoidable bias, disagreement, or uncertainty, could be clearly identified and discussed. Therefore, outside survey experts,

stakeholders, and members of the public were

involved in every step of the survey development process. The review process is discussed

in detail in appendix A.

The next goal was to develop a survey that

would be helpful in developing useful policy

options in an age of rapid technological

change. Two major objectives supported this

goal. First, the survey was to include ques

survey could identify similarities and differences in usage across technologies to help assess whether the same policy levers could affect different types of copying behavior. Given

limited time and resources, this objective was

only partially fulfilled. The final OTA questionnaire included questions about audio and

video copying. The second objective was to

gather information on public awareness of

and opinions on policy issues. There had been

a few public opinion polls on some of the specific remedies. For example, the Copy-right

Royalty Tribunal conducted a poll that explored peoples’ attitudes toward possible

remedies such as a tax on audio tape.13 OTA

planned to examine attitudes and opinions in

light of copying behavior to determine those

that were widely held and those that were peculiar to people who copied.

Another goal of the OTA survey was to provide information in a form that would be useful in an independent assessment of the economic effects of copying on the

copyright-holding industries. Results of several previous surveys have been used to estimate alleged “economic harms” to industry.

OTA intended to pursue economic analyses

that would weigh impacts on the general public, as well as on the industries involved. The

survey represented one phase of data collection for these analyses, which are described in

chapter 7.

The final goal of the OTA study was to provide an open and available database on home

copying that could be used or reanalyzed by

others. The OTA survey instrument and all

data collected are available through the National Technical Information Service. It is

hoped that this survey will be the basis for future studies.

I Scopyright ~ya]ty Tribunal, op. Cit., f~tn~te 4.
The final questionnaire was introduced to

respondents as a national survey on how the

public uses audio and video technology. The

topic of copying was not flagged as the particular area of interest. Indeed, to establish

the proper context for questions about taping

and copying, it was necessary to ask many general questions about peoples’ use of home

audio and video technology.

The final questionnaire was devoted primarily to the use of home audio technology,

with a small section on video technology. As

mentioned earlier, the original plan called for

questions on computers as well. One goal of

the survey was to compare different types of

home copying and to determine whether the

pattern of home audiotaping was similar to

other types of home copying. As the survey instrument was developed, however, it became

clear that there was not enough time to cover

all three subject areas adequately.

To retain some measure of nonaudiotaping

activities, the final survey included a short

section on videotaping and copying. The videotaping section, while considerably shorter

and less detailed than the audio section, was

designed to parallel some of the audiotaping

measures. The section included questions on

videocassette recorder ownership and on recent VCR-related activities, including recording off-the-air, renting or buying tapes, and

copying prerecorded videotapes. People who

did not have access to VCRs or who had not

made a tape within the past year had to answer only a few questions in this section.

The audio section was the longest segment

of the survey instrument. It included questions on music listening, ownership of audio

home taping behavior and motivations. Peo

ple who did not listen to recorded music were

required to answer only a few brief questions

in this section.

Music listening formed the context for

questions in the audio section. The questionnaire attempted to develop measures on the

importance or value of music listening to the

respondent. It then explored all the different

ways in which the respondent acquired the recorded music that he or she listened to most

recently, including purchases, gifts, and taping from various sources. The survey continued with detailed questions about the most

recent experiences of purchasing and taping

prerecorded music, where appropriate. The

survey also attempted to establish an inventory of the number of recordings and the types

of audio listening and recording equipment

available to the respondent.

A final section of the survey examined attitudes of the public –tapers and nontapers–

about the home taping of music. In addition,

this section gauged public opinion toward a

range of proposed policy alternatives to address the issue of the home taping of music.

A copy of the questionnaire is included in

appendix B of this report.

Study Population, Design, and

Sampling14

The target population of this study consisted of the noninstitutionalized population

of the United States, aged 10 and older. Since

the issues to be addressed by the survey were

broader than measuring the current quantity

of home taping, the survey design did not

14This -ion is Men from ~hu]m~, R.onca and Bucuvalas, Inc., Survey of Home Taping and Copying: Final Report. Vohme 2:

Detailed Findings on Home Audiotaping, report prepared for OffIce of Technology Assessment by John M. Boyle, Kenneth E. John, and

Jane A. Weinzimmer (New York, NY: February 1989), pp. 8-20; and Appendix A (Springtie]d, VA: National Technical Information

Service, October 1989).
the past. Rather, the population of interest

was the potential market for prerecorded

audio products and those potentially affected

by governmental policy related to audiotaping. Past research suggested that the entire

population of the United States, aged 10 and

over, was part of that market. Consequently,

the study design called for a national sample

of the population of the United States, aged 10

and over.

Previous research had established the importance of the younger age cohorts in both

the market for prerecorded music and the use

of home taping. Since it was important to represent younger persons in the sample adequately, even though response rates among

younger populations are usually lower than

average, a disproportionate sampling strategy

was adopted to ensure adequate representation of the population under 35 years old. The

sample was stratified by age cohort and a

within-household sampling technique was

used to increase the prior probability of selection for the 15 to 29-year-old age cohorts. The

use of a probability-based selection, rather

than a quota sampling approach, ensured the

statistical validity of the sample. The specific

details of the sampling procedures are presented in the contractor’s report.

The Field Period

After final approval of the questionnaire, interviewing began in late September 1988 and

continued until late October. A total of 1,501

interviews, averaging 25 minutes, were completed in this period. As in all population surveys, the demographic characteristics of the

achieved sample varied from current population estimates as a result of nontelephone

rates. The sample for the OTA survey was

weighted to current population estimates,

based on household size, age, sex, and race.

The survey findings from this weighted sample of the population of the United States,

aged 10 and older, should have been projectable to the total population from which it

was drawn, within the limits of expected sampling variation. Further details about the

sample appear in the contractor’s report.15

In the completed sample there were 563 interviews with a nationally representative sample of persons who had taped music from radio, television, records, tapes, or CDs in the

past year. The survey sample also included a

nationally representative sample of 897 persons who had purchased a record, prerecorded cassette tape, or CD in the past year.

In addition, there were 471 completed interviews with a nationally representative sample

of people who had used an audiotape recorder

in the past year to tape things other than music. In addition, interviews were completed

with a nationally representative sampleof717

persons who had acquired a videotaped program by rental, purchase, home recording, or

gift within the past year. Thus, the survey generated samples of adequate size to afford

some reasonably detailed analyses of home

audio- and videotaping activities.

SUMMARY OF SURVEY

FINDINGS

The OTA survey found that 4 in 10 of a nationally representative sample of persons

aged 10 and over had taped recorded music

(either from a broadcast or from a record,

prerecorded cassette tape, or compact disc) in

1 S&hu]mn, ~]nca, and Bucuvalas, Inc., op. cit., fOOtnOte 14.
197879, when surveys found that 21 to 22

percent of the population were past-year tapers. The 1988 finding was roughly similar to

the taping prevalence found in a 1982 survey.

Music tapers, in general, had a greater interest in music, listened to more music, and purchased more prerecorded music products

than did nontapers. Conversely, the majority

of nontapers listened to little recorded music.

Audiocassette was the most frequently purchased format of prerecorded music. The survey found, however, that tapers more frequently copied from records than they did

from tapes. People who purchased a

prerecorded item with the intention of taping

from it (as did about one-seventh of the sample) were far more likely to purchase a record

or CD than a prerecorded audiocassette.

Many people seemed to copy for the purpose

of “place-shifting,” that is, copying music

from records and CDs to the more portable

cassette format.

The survey found that a large majority of

people who copied from a prerecorded format

in their last taping session were copying their

own record, tape, or CD for their own use.

They usually copied with the intention of

keeping the tape permanently. About onefifth taped a copy for a friend or copied a borrowed item. Few copies were made from

homemade tapes.

People who taped from radio broadcasts

were less likely to copy full albums than those

who copied records, cassettes, or CDs. About

half of the last home taping of prerecorded

formats involved taping of whole albums.

While home taping certainly displaced

some sales of prerecorded products, survey

data also pointed to some stimulative effects.

Home tapes had value in promoting songs and

performers. In addition, a significant number

of purchasers bought prerecorded products

with the intention of copying them.

prerecorded music. Perhaps threefourths of

taping occasions involved taping something

other than music. Tapes of noncopyrighted

material varied widely in type, length, and

lasting value, with some, like answering machine messages, being rerecorded often. This

survey did not attempt to determine how

much space in home libraries was occupied by

prerecorded music as opposed to noncopyrighted material.

The survey found that people discriminated

little with respect to the grade of blank tape

they used for recording voice as opposed to

music. Indeed, a large majority of respondents had no idea of the grade of tape they

used in their last taping session.

The survey found that the availability of

dual-cassette and high-speed-dubbing technology had little relationship to the number of

homemade tapes. People with many homemade tapes, or with few, or even none, seemed

to own equipment with these capabilities in

roughly similar proportions. Thus, technology did not seem to drive copying behavior.

Distribution of these features may have reflected the number of players in the home, or

their recency of purchase, rather than taping

activity.

Most videocassette recordings, unlike their

audio counterparts, were made for temporary

use. Most videotaping fit the definition of

‘i time- shifting” outlined in the Sony decision.

A few specific program types– including concerts and educational shows— were copied

with the intention of keeping.

The survey found that, while television taping was common among VCR owners, copying

tapes was not. Of the tapes that were copied,

only a minority were made from an original

that belonged to the copier. Some originals

were rented from video stores, but the bulk

were obtained from friends. Thus, there appeared to be a modest level of exchange of
While the survey found a somewhat higher

incidence of video copying among music tapers than among nontapers, there was no

strong convergence between video- and

audiotaping behavior. The survey found that

much home-video and home-audio copying

was done by different people, for different reasons.

Although the general public was unfamiliar

with copyright law as it related to home taping, people did have opinions on the norms

governing acceptable behavior in the area of

home taping. In general, both tapers and nontapers believed that it was acceptable to copy

a prerecorded item for one’s own use or to give

to a friend. The only copying behavior that

was universally condemned —by tapers and

nontapers – was copying a tape to sell.

Although most respondents had little idea

whether the existing situation in home copying was fair to the recording industry, to performers, or to the consumer, they did strongly

oppose all the tested suggestions for changes

to the status quo that would impose user fees

or limit taping by technological means.

MUSIC LISTENING IN

AMERICA

The survey documented an active interest

in music listening among the American public, with frequent listening to music on radio,

television, records, tapes, and compact discs.

A majority (56 percent) of this nationally representative sample of persons aged 10 and

)

y pp

they had spent no time in the last 7 days listening to music on the radio and television. By

contrast, a majority of the sample (51 percent)

reported 7 or more hours of listening to

broadcast music.

Generally speaking, the survey found that

people listened to broadcast music more frequently than to music on records, tapes, and

CDs. Indeed, 43 percent of the survey respondents reported that they spent no time listening to music on prerecorded formats in the

past week. Nonetheless, a majority of survey

respondents (56 percent) reported listening to

recorded music in the past 7 days (see table

C2-4).

CONSUMER AUDIO

TECHNOLOGY

Given the widespread interest in music listening, it is not surprising that the survey

found that virtually everyone had one or more

types of audio playback equipment. The proportion of survey respondents with record

players in 1988 was 81 percent, effectively unchanged from survey estimates of 78 percent

in 1978.17 But the portion of the population

with cassette players had more than doubled

in the past decade, from 38 percent in 1978 to

94 percent in this survey (see table C2-7).

Most respondents had a number of different types of cassette player/recorders. Only 16

percent had only one of the four types of tape

decks examined in the survey. Nearly a quarter had two of the four types; 27 percent had

16Note: M] sumey tab]es me ]Wat~ in appendix C of this report, and the numbering is identical to that in the SRBI report (OP. cit.,

footnote 14). Sampling precision, statistical significance, and confidence levels are discussed in the SR.BI report, pp. 14-20.

‘Warner Communications Inc., The PF-w-wordd Music Market: An Inventory Survey, March 1978.
(see table C26). This actually understand the

number of cassette decks owned or used by respondents because the survey did not inquire

into the number of player/recorders that the

respondent had within each class.

This survey did not examine whether the

tape players had recording capabilities. Most

tape players currently on the market (except

for automobile stereos and some walkmantype players) can both play and record. Hence,

most tape players are assumed to be recorders

as well. The survey findings suggested that

virtually everyone aged 10 and older had immediate access to the technology to copy music recordings.

THE MARKET FOR

PRERECORDED MUSIC

Given the widespread ownership of cassette

players, it is not surprising that the audiocassette was the recorded music format most frequently owned by the sample population.

Nearly six out of seven respondents (84 percent) reported owning one or more audiocassette tapes. Indeed, nearly half (49 percent) of

respondents reported that they owned 11 to

50 audiotapes. It should be noted that while

audiotapes had achieved the greatest penetration rate, the LP record remained the most

numerous format for prerecorded music in

home inventories. The compact disc had the

smallest penetration rate: 18 percent of the

sample reported owning any compact discs.

Among this sample, 83 percent reported having purchased a record, prerecorded cassette

tape, or CD in the past. Over half (58 percent)

had purchased recorded music in the past

pastyear purchase of records, cassettes, and

CDs was 89 percent among the 15 to 19-yearolds, 78 percent among 20 to 24-year-olds, and

71 percent for the 25 to 29-year-olds, and 64

percent among 30 to 34-year-olds.

MOST RECENT MUSIC

PURCHASE EXPERIENCE

The recorded music format most frequently purchased in the past year was the

prerecorded cassette. Seven out of ten pastyear buyers of prerecorded music (70 percent)

reported purchasing a prerecorded cassette

on their most recent purchase occasion, compared with 18 percent buying LP records, 12

percent buying compact discs, and 3 percent

buying 45-rpm records. When the purchase

period was restricted to the past month’s purchases and all purchases were counted by

type, however, the survey findings suggested

that in the last quarter of 1988, prerecorded

cassettes represented 51 percent of the music

recordings sold to sample respondents; longplay records accounted for 22 percent of units

sold; compact discs accounted for 21 percent;

and 45 rpm records accounted for 7 percent of

the units sold.

Projection of Music Purchases

Schulman, Ronca and Bucuvalas used

“past-month” purchases to estimate the

number of units (records, prerecorded cassettes, and CDs) purchased in the United

States each year.18 SRBI arrived at a “corrected” estimate of approximately 750 million units per year.

18The s~I ~ep~ inc]ude~ ~ ~~timate of average ~nu~ purchases based on ~dysis of most recent purchases (,See SRBI Rewrt,

op. cit., footnote 14, p. 54). In comparing their projection with actual 19SS sales, as reported by RM, however, SRBI finds their

projection of 1,500 million purchases per year is too large by about a factor of 2. SRBI attributes this problem to recall error and

applies a 100 percent correction factor to develop what they consider a more a reasonable estimate: 750 million purchases per year.
spondents most recent purchases during the

past year. One motivation for this was that

the number of respondents was larger for

“past- year” events. Also, using more aggregated data for the recency of the event and

number of items per event could help reduce

the effect of recall errors. OTA used the data

presented in tables C4-2 and C4-5 on the most

recent purchase to approximate a weighted

average of the frequency of purchases in a

yearlg and an average number of items purchased per event (based on past-year purchasers). Assuming a U.S. population of 204 million persons age 10 and over, OTA’s method

yielded an estimate of 885 million annual purchases of prerecorded music items.

Thus, the survey data yielded a fairly broad

range of values for estimated yearly purchases, depending on the specific data items

and methods used (see table 6-2). But the

range was not very far from RIAA’s report

that a record 762 million units were shipped

in 1988.20

MOST RECENT LISTENING

EXPERIENCE

To understand respondents’ preferences

and behavior in more detail, the survey examined the most recent experience of music listening. It is reasonable to expect that the respondent’s recall of the nature and source of

the recording heard on this occasion to be

SRBl

OTA

Estimated number of

yearly purchases

(records, prerecorded

tapes, and CDs) 750 million 885 million

Estimated yearly

tapingsc from

prerecorded sources 600 million 578 million

Estimated yearly

tapingsc from

broadcast sources 700 million 439 million

a Estimates in first column are from the final report by the survey contractor, Schulman, Ronca, and Bucuvalas, Inc (SRBI) They are calculated from ‘“past-monthactivity, adjusted by SRBI’s 100 percent correction factor Based on past-month

tapers (N = 150 for prerecorded taping; N = 165 for broadcast taping)

b Figures in second column are OTA staff estimates, calculated from estimated

yearly frequencies (See tables C5-12, C15-13, C5-6, and C5-7 ) Based on “past

year” tapers (N = 406 for prerecorded sources, N = 336 for broadcast sources)

c "Tapings ” refers to instances of recording Number of "taplngs ” is not equivalent

to number of filled blank cassettes or album equivalents.

SOURCE: OTA Survey (September-October 1966)

most accurate. Respondents were asked to report the last time they had listened to recorded music on audiotapes, records, or CDs,

not including music on radio or television or

background music in public places. In the majority (59 percent) of cases, survey respondents reported that their most recent listening occasion had been within the past week;

for about 18 percent of respondents the last

listening experience was within the past

month (see table C3-1). In all, 88 percent had

listened to music within the past year. These

respondents were questioned about their listening experience in more detail.

19For ~xamp]e, ifa ~rson rew~~ that the ]ast time he bought a recording was 1 month ago, then an estimate of his Ye~lY purchase

frequency was 6 events per year, because (on average) the question would be asked midway between purchases.

OTA made some approximations in calculating the average frequency of purchases: “last week” was assumed to be a week ago, “last

month” a month ago, “last year” a year ago, “year or more” as two years, “not sure” as never. This tended to underestimate the true

frequency.

z’3R~ M~ket Research Committee, 1989. (See table 4-1 in this report. )
g ; pp

ing in a car. Most of the rest were at the home

of a friend or at work.

About two-thirds (64 percent) of those listening to recorded music within the past year

reported that they were listening to

audiotapes on their most recent listening occasion. Records were a distant second, reported in only 21 percent of listening occasions. Compact discs were listened to in

another 10 percent of cases. In 3 percent of

cases, respondents reported that their most

recent experience included a mixture of recorded formats – most often records and

tapes (see table C3-7). In three-quarters of the

cases (74 percent), the survey respondents

were listening to their own records, tapes, or

CDs, rather than someone else’s. Those who

were listening to their own recording were

asked how they obtained the recording. In 74

percent of the cases, the listener had purchased the recording for himself. In another

12 percent of cases, the respondent reported

that the recording was received as a gift (see

table C3-13).

Homemade Recordings in the Most

Recent Listening

As mentioned earlier, about three-fourths

of respondents reported listening to their own

recording on the last listening occasion. Of

these, 10 percent reported that they had made

the recording at home. The proportion of

homemade tapes was almost twice as high

among Blacks (20 percent) and 10 to 14-yearolds (18 percent). Perhaps surprisingly, the

proportion of homemade tapes among recordings last listened to was found to be low

among 15 to 19-year-olds (5 percent) (see table C3-13).

The survey findings thus documented that

around 7.4 percent (0.10 x 0.74) of the listeners heard homemade tapes on their last listenPhoto m Office of Technology Assessment

Music tapers also buy recordings.

ing experience. Indeed, if it is reasonable to assume that the 24 percent of recordings

belonging to someone other than the respondent mirrored the same pattern, then around

10 percent of the music most recently played

was a product of home copying. Moreover, the

survey also found that 31 percent of the

audiotapes that were borrowed or given to

survey respondents were tapes that someone

had made. Combining these sources produced

an estimate that around 12 percent of the recordings most recently played by persons

aged 10 and older were the product of home

taping.

The most common sources of music for

these homemade tapes were the records, cassettes, and CDs already owned by the respondent. Over one-third (37 percent) of these

tapes were made from the respondent’s own

original recordings. Radio broadcast music

was the source material for another 29 percent. Records, prerecorded cassettes, and CDs

belonging to others were the source of music

for most of the remaining tapes (22 percent).

Fewer of the homemade tapes were copied
(see tabe C33).

The sample size of respondents who had

most recently listened to a homemade tape

was small, so analysis of this group could only

be suggestive. The data did suggest, however,

that the youngest home-tape listeners were

most likely to obtain material from radio. The

data also suggested that about half (51 percent) of the tapes included one or more entire

albums, while a little under half (46 percent)

were made up of selections from a number of

different albums. About 23 percent of the

homemade tapes were exclusively complete

albums, with no mixture of selections included (see table C3-15). To the extent that

these data could be relied on, they suggested

that about 3 percent (23 percent of 12 percent)

of the recordings most recently played by the

sample population were copies of albums in a

form that should have been commercially

available.

PREVALENCE OF HOME

TAPING

One of the principal objectives of this study

was to provide current estimates of the prevalence of home taping in the population. Home

taping means the use of a tape recorder at

home–to tape any sound, voice, or music,

from any medium. A major concern in this

study, however, was the copying of copyrighted music from recordings or from television and radio broadcasts.

This section describes the activities of persons who had used an audiotape recorder at

home, within the past year, to tape music

pypg 

definition. Men (44 percent) were somewhat

more likely than women (38 percent) to be

past-year tapers. Blacks (48 percent) were

somewhat more likely than whites (40 percent) to have taped in the past year. These tapers include majorities of those aged 10 to 14

(80 percent), 15 to 19 (77 percent), and 20 to 24

(59 percent) years old (see table C5-1).

The finding that 41 percent of this nationally representative sample were past-year tapers suggests that home taping was nearly

twice as prevalent in 1988 as was found by surveys in 1978 (21 percent)21 and in 1979 (22 percent)22 that used the same population and

similar questions.

It is possible that much of the rapid expansion in home taping occurred between 1978

and 1982. The Yankelovich survey in 1982

found that the prevalence of taping in the previous 3 months was 29 percent among the

population aged 14 and older.23 Using the

same period of opportunity and restricting

the sample to those 14 and older, the OTA survey found a virtually identical rate of 28 percent in 1988 (see table C5-3).

The changes in the rates of home taping

among the teenage population since 1978-79

was particularly notable. The 1979 survey

cited previously found the prevalence of home

taping highest among 14 to 15-year-olds (39

percent). The rate of taping was substantially

lower among the 10 to 13-year-olds (27 percent), while among older teens (32 percent)

and the 18 to 29 age group (32 percent) the

rate was the same. It then gradually declined

with age (see table C5-2).

Zlwmner Communications Inc., op. cit., footnote 1’7.

2HI’he Roper Organization, op. cit., footnote 8.

Xymkolotich, Ske]]y, & White, Inc., op. Cit., rmtnote 9.
y, py,

and 82 percent for 16 to 17-year-olds. The

prevalence of home taping had increased by

more than twofold in each of these groups

since 1979 (table C5-2).

The increase in taping among older persons

since 1979 was not so dramatic – it was on the

order of a 50-percent increase. One exception

was the group aged 60 and over. Although taping was fairly rare (11 percent), it had more

than doubled compared with the proportion

(4 percent) found a decade ago (table C5-2).

It is notable that the prevalence of home

taping had always been higher among current

buyers of recorded music. The 1978 Warner

survey found that the rate of past-year taping

was 32 percent among persons who had purchased recorded music in the past year compared with 21 percent among all persons aged

10 and over. A decade later OTA found that

the rate of past-year taping was 53 percent

among past-year purchasers of recorded music, compared with 41 percent of all persons

aged 10 and over. In both cases this meant

that about three-quarters of past-year tapers

were also past-year music buyers. But the proportion of tapers who were not buyers increased– from approximately 20 to 25 percent – over the past decade (see table C5-4).

A person may make a home tape of

prerecorded music either by recording music

played on TV or radio or by directly copying a

prerecorded format (record, tape., or CD).

This report refers to the former as broadcast

taping (although some taping may occur from

cable transmission), and to the latter as taping from a prerecorded format.

Nearly half (45 percent) of the nationally

representative sample of persons aged 10 and

older reported that they had made an

audiotape of music from radio or television at

some time in the past (see table C5-5).

Of the total sample, 27 percent taped music

from radio and television in the past year.

These past-year broadcast tapers included a

majority of persons aged 10 to 14 (64 percent)

and 15 to 19 (67 percent). By contrast, the rate

of past-year broadcast taping was 41 percent

for those aged 20 to 24, 27 percent for those

aged 25 to 29, and 20 percent for those aged 30

to 34. The survey data strongly suggested that

broadcast taping, while not limited to the

teen-age years, was far more characteristic of

teens than of older persons (see table C5-6).

Those whose most recent broadcast taping

occurred within the past month were asked on

how many occasions, in all, they had made

audiotapes of music in the past month. These

occasions of taping were then summed across

the sample. There were a total of 713 occasions in the previous month of taping from radio or television. This analysis put the role of

teenagers in broadcast taping in stark relief.

Persons aged 10 to 14 accounted for 33 percent of broadcast-taping occasions, while persons aged 15 to 19 accounted for another 31

percent (see table C5-9).

An estimated total of 850 tapes were made

in the 713 taping occasions in the past

month.24 The survey questions did not assess

how much tape was actually filled on these occasions. Thus, it was safer to describe these as

24~~Pndent~ who were not sure how mwy times they had @@ or how m~y tapes they had used were given a conservative score

of 1 for the missing values.
vision. They were not equivalent to the num

ber of blank tapes used or number of albums

copied. A later section will consider the proportion of full albums to individual selections

recorded in these tapings.

As would have been expected from the earlier survey findings on taping occasions, the

bulk of broadcast tapings were made by

teenagers. The 10 to 14-year-olds accounted

for 37 percent and the 15 to 19-year-olds accounted for another 27 percent of broadcast

tapings in the past month (see table C5-1O).

Home Taping From Prerecorded

Formats

Half (50 percent) of this nationally representative sample of persons aged 10 and over

reported that they had taped music from a record, prerecorded cassette, or CD at some

time in the past. The lifetime prevalence of

home taping from prerecorded formats was

thus slightly higher than the lifetime prevalence of broadcast taping (45 percent) discussed in the previous section. It should be

noted that this estimate of home taping from

prerecorded sources did not include the copying of homemade tapes.

Of the total sample of persons aged 10 and

older, 28 percent had taped music from records, prerecorded cassettes, or CDs within

the past year. A majority of persons aged 15 to

19 (65 percent) and substantial minorities of

those aged 10 to 14 (42 percent) and 20 to 24

(45 percent) copied prerecorded music within

the past year. Similar rates of taping were

found among 25 to 29-year-olds (31 percent)

and 30 to 34-year-olds (35 percent). The rate

declined further to only 20 percent among the

35 to 64-year-olds, while the rate of past-year

taping among the over-65 age group was

nearly nonexistent (4 percent) (see table

C5-12).

how many occasions they had taped music

from records, tapes, or CDs in the past month.

These occasions of past-month taping were

then summed across the sample. Respondents

reported a total of 301 occasions of taping in

the past month. The survey findings continued to confirm the major role of teenagers in

music copying. Persons aged 10 to 14 (24 percent) and 15 to 19 (21 percent) were responsible for nearly half of the occasions of taping

from prerecorded formats in the past month

(45 percent). Note that thk was a substan-is

tially smaller share of prerecorded music

copying than the 63 percent of past-month

broadcast copying that they accounted for

(see previous section). An estimated total of

736 tapes were made in the 301 taping occasions in the past month by this nationally representative sample of 1,501 persons aged 10

and over. Once again, since the OTA survey

did not assess how much tape was actually

filled on these occasions, it was safer to describe these 736 as tapings (i.e. tapes used to

record one or more music recordings) from records, prerecorded cassettes, and CDs. As

would have been expected from the earlier

survey findings on taping occasions, teenagers

accounted for the majority of tapings made

from records, cassettes, or CDs. Tapes made

by 10 to 19-year-olds accounted for 56 percent

of all tapes made from prerecorded formats in

the past month (see table C5-17).

Total Taping Estimate

SRBI used “past-month” data to estimate

total annual taping in the U.S. population.

Their “corrected” projections were about 700

million broadcast tapings and 600 million

tapings from prerecorded sources per year.

OTA developed alternative estimates of annual taping that used a yearly frequency

method similar to that used to project annual

20-900 - 89 - 5
, 

there were approximately 439 million broadcast tapings and 578 million tapings from

prerecorded music formats in the past year

(see table 6-2 for a summary of the OTA and

SRBI estimates). The survey data supported a

broad range of estimated values, depending

on the data items and methods used. It is important to remember that both the SRBI and

OTA estimates were of “tapings,” not of full

tapes or album equivalents.

PROFILE OF THE HOME

TAPER

The survey findings allowed OTA to classify

the sample population into one of four mutually exclusive categories of home taping of

music. The largest category was those who

had not taped music from radio, television, records, audiotapes, or CDs in the past year.

Sixty-one percent of the population aged 10

and over fell into that category.

The remaining 39 percent of the population

had made audiotapes within the past year.26

Of these, those who taped only from radio or

TV represented 11 percent of the sampled

population, those who have taped only from

records, cassettes, and CDs represented 12

percent of the population, and those who have

taped from both broadcasts and recordings in

the past year represented 16 percent of the

sampled population (see table C5-19).

Table C5-19 shows the demographic characteristics of these four groups. Both 10 to

pg

major factor in home taping, there appeared

to be a higher rate of taping among those with

incomes of over $50,000. These income groups

were also less likely to be broadcast tapers.

What may be more important in understanding the past-year tapers is how music

taping relates to other music-listening characteristics. The survey showed that the pastyear music taper had a greater interest in music than the nontaper. The proportion of those

who considered music listening extremely important increased from 16 percent of those

who had not taped music in the past year to 35

percent of those who had taped from radio

and television only, 23 percent of those who

had taped from prerecorded formats, and 45

percent of those who had taped from both

broadcasts and prerecorded formats in the

past year (see table C5-20).

As a result, the music taper listened to more

music, on average, than did the nontaper.

Only 18 percent of nontapers listened to 20 or

more hours of radio in the past week. By contrast, the proportion of music tapers listening

to 20 or more hours of radio was 34 percent for

broadcast tapers, 27 percent for those who

taped recordings only, and 39 percent for

those who taped both broadcasts and

prerecorded formats. Music tapers also listened to more music on records, tapes, and

CDs in the past week than did nontapers. The

proportion of respondents reporting not listening to recorded music declined from 57

percent of nontapers, to 30 percent of broadcast tapers, to 20 percent of those who taped

Z5W discussion of purchase estimate and footnote 19.

mThere ~a~ a ~]ipp~ ~tw~n the 41 ~rcent of the population who said that they had taped from a radio, television, records,

cassettes, or CDs in the past year, and the combined estimates of 39 percent of persons who said that their most recent taping from

radio and television or their most recent taping from records, tapes, or CDs occurred within the past year. Given the potential difficulties of classifying an activity that occurred about a year ago, OTA considered the differences in independent reports to be minimal.
stated, the majority of those who did not tape

music did not listen to recorded music (see table C5-20).

Considering the interest of the music taper

in listening to music and the frequency with

which he listened to recorded music, it is not

surprising that the survey found that the music taper was also the music purchaser. As the

table shows, over half (53 percent) of those

who had purchased any records, prerecorded

cassettes, or CDs in the past year had also

taped music from radio, television, records,

tapes, or CDs. This figure actually understated the relationship of music taping and

purchase, however. The total number of

tapings made from prerecorded formats in

the past month suggested that 56 percent of

those copies were made by persons who had

purchased a record, prerecorded cassette, or

CD in the past month. Indeed, 88 percent of

past-year music tapings from recordings were

made by persons who had purchased records,

cassettes, or CDs in the past year (see table

C5-23).

The survey findings clearly indicated that

music tapers were also music purchasers, and

vice versa. Moreover, they also suggested that

frequent tapers also tended to be frequent

buyers. This association did not necessarily

mean that home music taping stimulated

buying prerecorded music or that the purchase of prerecorded music might not have

been more frequent without taping. It did,

however, indicate that any actions directed at

music tapers would affect primarily the purchasers of recorded music.

Album v. Selection Taping

The type of taping done by home tapers determined whether they were producing an exact copy of a commercially available product.

This issue revolved around whether home tapers were primarily creating customized se

duplicating albums that could be purchased.

The survey findings helped to clarify this issue. The broadcast taping of music from radio

and television was almost exclusively nonalbums. The survey responses suggested that

only 8 percent of the most recent broadcast

tapings involved the copying of an album,

while another 15 percent might have involved

a mixture of albums and selections. A majority of 56 percent reported that they were taping only singles or selections on that occasion

(see table C6-1).

By contrast, album taping was much more

widespread in the taping of recorded music.

Among those who had taped records, cassettes and CDs in the past year, 70 percent reported taping one or more complete albums

on their most recent taping occasion. As can

be seen in table C6-3, the group with the highest proportion of album taping was the 10 to

14-year-olds, while the over-65 group had the

lowest proportion. The variation by age was

fairly small, however.

Cross-tabulating album taping with selection taping for the most recent taping experience from prerecorded formats enabled OTA

to classify the population in terms of the contents of the last tape they made. Approximately half (48 percent) of the last home

tapings of prerecorded music involved the

taping of whole albums with no selections.

This represent simple duplication of existing albums, either in their original or a different format. Another 21 percent of the most recent home tapings from prerecorded music

involved the copying of whole albums in combination with selections from other albums or

singles. The proportion of most recent tapings

that represented selection taping, exclusively,

was 21 percent. The remaining 10 percent of

most recent tapings were only partially classifiable because of missing values on one or the

other measures (see table C6-5).
By definition, all current home taping is

done onto an audiotape format, but there remains the question of the format of the original prerecorded material.

The survey found that half (49 percent) of

those who had copied from prerecorded formats in the past year made their most recent

taping from a record. Another 28 percent of

the most recent tapings were from cassettes,

while the remaining 18 percent of tapings

were from CDs.

The format of the original material from

which home tapes were made was quite different from the most recent purchase pattern

seen earlier. Records represented 18 percent

of most recently purchased recordings, but 49

percent of the recordings copied in the most

recent taping. By contrast, the dominant format for buying prerecorded music— the cassette– represented only 28 percent of the

most recent tapings from prerecorded format.

If the primary motivation for home copying

was to obtain current releases without buying

them, one would expect the same distribution

of recorded formats copied as the distribution

of formats purchased. This was not the case. It

appeared rather that home taping was being

done– at least in part – to convert recordings

in other formats to the dominant playback

mode. Since records and CDS cannot (usually)

be played in cars and in portable playback

equipment, it would appear that at least some

home taping was being done to convert existing records to the more flexible format of

audiotape.

Source of Original: Own v. Others’

All survey respondents who had copied

from a prerecorded format in the past year

were asked about the source of the original

hold members or family, one borrowed from

friends, or one obtained elsewhere. The question was asked separately for complete albums being copied and for individual selections being copied during the last taping

session.

The survey found that a majority of home

music tapers, who were taping one or more

whole albums in their most recent taping,

were using their own original record, tape, or

CD to make the tape (57 percent). Moreover,

another 7 percent of home tapers were using

an album owned by another member of their

household (3 percent) or their family (4 percent) (see table C6-10).

Permanence of Tape Libraries

Nearly three-quarters of the most recent

home tapings of prerecorded music were

made for the taper’s own use (73 percent). Another 7 percent of these tapings were made for

another member of the household. About onefifth (19 percent) of most recent home tapings

were made by the taper for someone outside

the household. The incidence of taping for

outsiders was highest among those aged 15 to

19 (27 percent) (see table C6-12).

The survey found that the vast majority of

home audiotapes were made to keep. Sixtynine percent of those who made a tape for

themselves from radio or television in the past

year reported that the last tape they made was

to keep, not to use temporarily. Even more

strikingly, 85 percent of those who made a

tape for themselves from records, tapes, or

CDs in the past year reported that the last

tape they made was made to keep. This is in

sharp contrast to the pattern for videotaping,

which will be discussed further in a later section.
When asked in an openended fashion why

they had made their most recent tape from a

prerecorded format, the respondents’ single

most common explanation — given by onefifth (21 percent) of the sample–was that

they had wanted a tape for their car. In addition, 3 percent wanted a tape for their

walkman-type player, while another 2 percent

wanted to be able to play the recording on an

unspecified type of tape player. In other

words, over a quarter of the most recent copies of prerecorded music were made to play

the recording on other playback equipment

belonging to the taper (see table C7-1).

Making a tape to give to someone else was

another common motive for taping. One in

five tapers reported making the most recent

tape to give to a friend ( 14 percent) or a family

member (6 percent). By contrast, only a

smaller proportion explained the most recent

tape in terms of making a selection tape (6

percent) or saving money/avoiding purchase

(6 percent).

This is not to say that economic concerns

were not a factor in home taping. The majority of home tapers (57 percent) indicated that

they could have purchased the same material,

if they had so wanted. Of these, a majority (63

percent) said that the fact that taping was less

expensive than purchasing was an important

factor in their reason for making their most

recent tape. When combining the proportion

of tapers who could have bought the material

with the proportion who considered saving

money an important factor, the survey findings suggested that the fact that taping was

less expensive than buying was important in

about 36 percent of the most recent tapings

(see tables C7-2 and C7-3). Naturally, answers

to these questions did not prove the extent to

which the opportunity to save money actually

influenced respondents’ behavior.

The most recent taping was selected as the

most valid single measure of the nature of

y p(g)

who had taped from a prerecorded format in

the past year whether they had ever made a

tape for one of six reasons are listed in table

C7-4. Those who had made a tape for one of

these reasons were asked when they had last

made a tape primarily for that reason. If the

most recent occasion was within the past

month, they were asked the number of times

they had made a tape for that reason.

The most common reason for home taping

from prerecorded formats in the past month,

according to the sample of tapers, was to permit the taper to shift a recording he owned to

other playback equipment. One-third of occasions reported in the past month (34 percent)

was mainly to “make tapes of their own records, cassettes, and CDs so that they can play

them in their car, Walkman, or elsewhere.”

This was consistent with the leading reasons

given for the most recent taping.

Taping selections “to create their own customized program of music on tape,” which

was attributed by adults to comprise 23 percent of past-month tapings, emerges as the

second most common factor in home tapes

made by adults. A little less than one-fifth (18

percent) of the taping occasions in the past

month are attributed by adult tapers to a desire “to protect the originals from damage and

keep them from wearing out.” By contrast,

only 13 percent of music tapings by adults

from prerecorded formats were attributed to

making tapes of friends’ recordings “so that

they don’t have to buy them” (see table C7-4).

COPYING AND THE

RECORDED MUSIC MARKET

Sales Displacement of Home Taping

Exact measurement of the amount of

prerecorded music sales displaced by home
home tapings that might be displacing sales,

compared with those that do not. Chapter 7

discusses the use of the survey data to develop

a range of estimates of the extent to which

homemade tapes displace sales.

The survey found that 57 percent of those

who taped from a prerecorded format in the

past year thought that they could have bought

the material if they had wished (see table

C7-2). There was no clear pattern by age, sex,

race, or income for the willingness to purchase

in the absence of taping. Presumably, then,

the willingness to buy depended more on

value to the individual of the particular item

being taped (see tables C8-2, C8-3).

One factor in the value of the homemade

tape to the taper appeared to be its intended

end use. A majority of tapers who were making the tape for themselves (53 percent) said

that they would have purchased the material

if they could not tape. By contrast a minority

of those making the tape for other household

members (32 percent) or other persons (42

percent) said that they would be willing to

purchase if they could not tape it. This suggests that taping for other people is a marginal activity for most tapers.

Those who would not buy, even if they could

not make a tape, were asked why they would

not purchase the material. Three answers

were given by two-thirds of this group. First,

29 percent of nonbuyers said that they already

had a copy of the material – they did not need

another copy. For these, the tape appeared to

have been a convenience, an extra copy for

protection or use elsewhere, but not worth

paying for. Second, 23 percent said that they

could not afford to buy it. Another 19 percent

said they would not buy the recording because

As mentioned earlier, 57 percent of those

who taped from a prerecorded format in the

past year thought that they could have bought

the material if they had wished. Of those,

about half (49 percent) said that they would

have bought it, if they had been unable to tape

(see table C8-2). In 77 percent of cases in

which the taper could have purchased, the taper said that if he had bought the recording, it

would have been in addition to other recordings purchased, rather than in place of them

(see table C8-5). With these three sample proportions combined, (0.57 x 0.49 x 0.77), the

survey data would suggest that about onefifth (22 percent) of the most recent tapings

from prerecorded formats displaced sales of

prerecorded music that might have otherwise

been made, if the respondent could not tape;

however this estimate may be excessively

high.

It is important to note the perils of using hypothetical questions (such as “Would you

have purchased that item if you were unable

to tape?” or “Would it have been in addition to

other recordings you have purchased?”) in

surveys. Typical marketing research experience is that only about half (or even fewer) of

the people who answer affirmatively to hypothetical questions actually engage in the behavior being studied.27 Thus, any undiscounted estimate of displacement based on a

series of questions like these should be considered an upper bound.

Such an analysis based on hypothetical

questions (and a small portion of the sample

population) was only meant to be suggestive

and to give an upper bound to possible consumer behavior. If the analysis was correct, a

sales displacement rate of possibly 22 percent,

but probably much lower, could be projected

z7~e SRB1 repO~, op. cit., footnote 14, pp. 102-103, for a discussion of the use of hypothetical questions.
p, 

tapes that would have been made would not

be replaced by sales of prerecorded music.

Stimulative Effects of Taping

Some have argued that home taping may

stimulate sales of prerecorded music, even if it

displaces some sales. The accurate measurement of sales stimulation in a retrospective interview was even more difficult than the estimate of sales displacement. The survey did

suggest the likelihood of a stimulative influence of home taping on music purchases, but

the data did not support a quantitative estimate of its magnitude.

Home tapes may broaden audience awareness of performers and recordings in the marketplace. Hearing a piece of music or a performer on a homemade tape may not “cause”

a person to make a purchase, but the home

tape must be considered to have some promotional value. Approximately one-quarter (24

percent) of past-year purchasers reported

that they had heard the recording or performer of the recording that they most recently purchased on a tape made by themselves or someone else before their purchase

(see table C8-11,).

The audience reach of homemade tapes is

clearly not that of either radio or prerecorded

music formats. Nonetheless, more recent purchasers reported having heard the performer

or recording that they most recently purchased on homemade tapes than in concert

(21 percent). It is also important to note that

having heard the performer or recording on

homemade tape did not discourage subsequent purchase in these cases (see table

C8-11).

A second possible stimulative effect of

home taping was related to purchasers’ intent

pyy 

pected to tape from his most recent purchase,

at the time they bought it. One out of seven

past year buyers (14 percent) said that at the

time of their most recent purchase of a record,

tape, or CD, he expected to tape from the recording he purchased (see table C8-13).

Survey findings point to an interesting relationship between the purchase of recorded

music with an expectation of taping and the

format of the material purchased. Although

prerecorded cassettes are the most frequently

purchased, only 8 percent of those buying a

cassette on their most recent purchase bought

with the expectation of copying it. By comparison, 16 percent of those who bought a CD

report that they bought the CD with the intention of copying it. Most dramatically, over a

third (35 percent) of those who purchased a

record on their most recent buying occasion

bought the record with the expectation of

copying from it (see table C8- 13). This is consistent with earlier findings that records are

the most common format from which music

is taped.

How many persons have actually taped

from their most recent purchase? The survey

found that among past-year purchasers,

about 1 in 10 (11 percent) had made a tape

from his most recent purchase by the time of

the interview (see table C8-14). It is notable

that fewer purchasers had actually made a

tape (11 percent) than had intended to make a

tape when they bought the recording (14 percent). When cross-tabulating purchase intent

with actual taping, the survey found only half

(51 percent) of those who intended to tape

their most recent purchase had taped it by the

time of the interview. By contrast, only 4 percent of those who had not expected to tape

from their most recent purchase reported

that they had taped from it by the time of the

survey.
It should not be assumed that taping music

from broadcasts or prerecorded formats is the

main or only use of home audio recording

technology. The survey found that 62 percent

of respondents who had used tape recorders in

the past year had taped material other than

prerecorded music. This figure translated

into 32 percent of the entire sample of persons

aged 10 and older who used tape recorders to

record noncopyrighted material, such as family members’ voices, reports, dictations, and

messages (see table C9-1.) As with the recording of prerecorded music, younger people

were most likely to use an audio recorder to

record noncopyrighted material.

In comparing the number of reported occasions of taping music and taping nonPhoto Credit Office of Technology Assessment

Some tapes are of family members’ voices.

g 

taping things other than prerecorded music.

In other words, in three out of four times a

tape recorder was used in American households in the past year, it was used to tape

voices, messages, music played by the respondent, and other material (see tables C9-3,

C9-4, and C9-9).

While the survey suggested that home

audio recorders were used more frequently to

tape material other than prerecorded music,

this did not mean that most homemade tapes

contained noncopyrighted material. The nature of the two types of recording is considerably different because recordings of noncopyrighted material vary widely in length and

type. The most dramatic example is the recording and rerecording of a telephone answering machine message. This survey did not

attempt to measure the amount of space in

homemade audiotapes that contained prerecorded music as opposed to noncopyrighted

material.

The survey did suggest that people make

little discrimination in the grade of blank

tapes they used. Only about a quarter (23 percent) of those making tapes of noncopyrighted

material and about a third (32 percent) of music tapers knew what grade of audiotape they

used to make their most recent recording.

Among those who did know what kind of tape

they were using, a somewhat higher proportion of those taping noncopyrighted material

(38 percent), compared with music tapers (27

percent), reported using a normal bias grade

of blank tape.

Taping Technology and the HomeTape Inventory

The survey documented the presence of

multiple tape player/recorders in most households, but did not determine the purpose for
pg 

which facilitate the copying of prerecorded

music.

The survey found relatively little relationship between the presence of a dual-cassette

recorder in the household and the number of

home audiotapes made by the respondent.

Among those who owned no audiotapes made

by themselves, nearly a quarter [24 percent)

had cassette recorders with dual-cassette

drives. The availability of advanced copying

features did not appear sufficient to generate

home taping among those who owned them

(see table C10-6).

The amount of homemade audiotapes that

the respondent owned did not seem to be related to the presence or absence of a dual-cassette recorder. The incidence of dual-cassette

recorders was basically the same — about halffor those reporting 1 to 10 homemade tapes in

their collection (51 percent), 11 to 25 tapes (50

percent), and 26 to 50 tapes (48 percent). Of

those with over 100 homemade tapes, 65 percent had dual cassettes, and those with 51 to

100 tapes had a rather low 42 percent (see table C10-6).

A similar pattern was found between the

number of homemade audiotapes in a respondent’s collection and equipment with fastdubbing features. Restricting the analysis to

those persons with dual-cassette recorders,

the survey found that the proportion of persons with dual recorders included 59 percent

of those who have no homemade tapes at all.

More important, the rate of fast-dubbing capability increased from 62 percent for those

with 1 to 10 homemade tapes to 84 percent for

those with 100 or more. The proportion with

fast dubbing did increase among heavy tapers,

but not dramatically (see table C10-7).

The data suggested that the technology of

fast dubbing and dual cassettes did not seem

to be driving home taping. Rather, their distribution looked more like an incidental re

ggpygy

than copying technology, has driven home

taping.

HOME

The survey

VIDEOTAPING

attempted to determine

whether the behaviors studied in some detail

in the area of music taping were similar to the

general pattern of other forms of home taping, specifically videotaping.

The videocassette recorder (VCR) was the

second most prevalent form of consumer recording technology. While 94 percent of the

sample population had audiocassette decks,

69 percent had one or more working videocassette decks. Thus, more than two-thirds of the

population had the ability to record video programming from broadcast or cable television.

Indeed, a majority (59 percent) of VCR owners

reported recording one or more programs

from television in the past month. More than

a quarter of VCR owners (28 percent) reported

five or more taping occasions in the past

month, that is, more than once a week on average.

The survey findings suggested that the majority of programs taped from television were

movies, sporting events, and soap operas, with

relatively fewer prime-time network programs. The majority of those taping television

programs (62 percent) reported that their

most recently made videotape was made to be

used only temporarily, rather than to keep.

The nature of the programming appeared to

have a major impact on the permanence of the

recording. Most of those taping sporting

events, comedy or drama series, or talk shows

made the tapes for temporary use. But substantial portions of those taping concerts, music videos, movies, mini-series, documentaries, cartoons, and educational programs

made the tapes to keep (see tables C12-10 and

C12-11.)
gpg 

among VCR owners, copying videotapes was

not. Only one in five VCR owners who had acquired a videotape in the past year (20 percent) reported ever having copied a videotape,

either prerecorded or home recorded. The

proportion of VCR owners who had copied a

tape in the past year was only about 1 in 10 (12

percent) (see table C12-12). Tape copies accounted for only 2 percent of the most recently acquired videotapes, compared with 23

percent of those that were purchased by the

respondent, and 54 percent recorded from

television (see table C12-8).

Unlike the copying of prerecorded audio

formats, only a minority of the videotapes

that were copied belonged to the respondent

or his family. Nearly a quarter (23 percent) of

the most recently copied videotapes were obtained from a video club or store. The bulk (42

percent) of originals, however, were obtained

from friends. The survey suggested a modest

level of exchanging videotapes among friends

to make copies, as well as copying videotapes

for friends. When asked whether they could

have purchased the videotape they copied if

they had wanted to, a little over one-third (35

percent) thought that they could have bought

the tape, while 57 percent thought that they

could not have, and 8 percent were not sure

(see table C12-19). Of respondents who made

a videotape copy in the past year, 70 percent

reported that they made the copy with the intention of keeping it.

Comparison of Video- and

Audiotaping Behaviors

While the pattern of television home recording in general was consistent with the

time-shifting explanation, this applied to very

little of radio recording. Most videotapes from

television were made for temporary use –

that is, to be viewed once, or a few times, at the

pp

recording from radio (69 percent) and television (35 percent). This difference may have reflected the proportion of programming in the

two media that had permanent value to the

consumer. As noted above (tables C12-10 and

C12-11), a higher proportion of music programs were made to keep (80 percent). Thus,

videotaping of concerts, and musical entertainment seemed to be more similar to the

pattern of audiotaping.

One goal of the survey was to determine

whether there was convergence between the

populations of audiotape copiers and videotape copiers. Table C12-21 shows the responses of music tapers (who had acquired a

videotape in the past year) to the question,

“Have you ever copied a videotape?” The survey found some relationship between persons

who copied videotapes and those who copied

prerecorded music. As noted earlier, 20 percent of the sample population (17 and older)

who had acquired a tape within the past year

reported having ever copied a videotape. As

shown in the table, higher proportions of respondents who tape from prerecorded formats (30 percent) and from both radio and

prerecorded formats (39 percent) reported

having copied a videotape.

Despite the survey evidence of increased

likelihood of videotape copying among those

who audiotape, this tendency was limited.

Note that among those who had taped music

both radio and from prerecorded formats in

the past year, 60 percent had never copied a

videotape. By contrast, the 12 percent of nonmusic tapers who had made a videotape represented over onethird (35 percent) of all videotape copiers.

Analyzing the most recent videotape acquisition tended to confirm this pattern. The proportion of most recently acquired videotapes

that were recorded from television was somewhat higher among those who had audiotaped
gp

ever, the survey found that the majority of

those whose most recent videotape acquisition was recorded from television had done no

music audiotaping in the past year. There

seemed to be little difference between music

tapers and others in terms of the proportion

of copied tapes (see table C12-22).

Hence, the survey findings suggested that

home video copying and home audio copying

were not done by the same people, for the

same reasons, under the same conditions.

There was some overlap between the two behaviors, but they were substantially different.

PUBLIC ATTITUDES

Attitudes Toward Taping

The survey found that most members of the

public considered themselves to be unfamiliar

with copyright law, but they nevertheless had

clear-cut ideas about the acceptability of

home taping. The majority of the public (76

percent) considered itself only slightly or not

at all informed about copyright laws and their

application to home taping (see table C11-1).

The survey did show a relationship between

taping and familiarity with copyright law. A

higher proportion of past-year tapers (32 percent) than nontapers (20 percent) considered

themselves extremely or quite familiar with

the law. Perceived familiarity with copyright

law did not reduce the likelihood of home taping, nor did lack of familiarity with the law increase it.

To learn what kind of norms existed in the

area of home taping, survey respondents were

asked to classify certain behaviors on a

7-point scale of personal acceptability. A score

of 7 meant that the action was perfectly acceptable. A score of one meant that it was not

at all acceptable. The specific wording of the

question appears in table C11-2.

cent) gave a score of 7 – perfectly acceptable.

Moreover, 75 percent of respondents ranked

this behavior on the acceptable side of the

scale (i.e., 5 to 7). Only 11 percent of the public

ranked copying of records, cassettes or CDs

now owned for his own use on the unacceptable side of the scale (see table 11-2).

The public acceptability of many forms of

home music taping was even more clearly

seen in considering situations in which the

owner of the original materials did not retain

the copies of the prerecorded music. When

asked how acceptable they considered “making a taped copy to give to a friend of a record,

cassette, or CD that you own,” a majority of

the sample (63 percent) rated the behavior as

acceptable (i.e., 5 to 7 on the scale), while 40

percent rated it perfectly acceptable. Responses concerning the acceptability of taping

borrowed materials were virtually identical,

and it apparently did not matter to respondents whether the taper was copying whole albums or selections (see table C11-2).

The only form of taping that the survey

found unacceptable to the public, among the

five general types explored, was taping for

gain. When asked about the acceptability of

“making a taped copy to sell of a record, cassette, or CD that you own,” three-quarters (76

percent) of the respondents rated it as not acceptable (1 to 3 on the scale); indeed, twothirds (67 percent) found it not at all acceptable.

There were differences in the overall rating

of the acceptability of the various forms of

taping behavior that depended on the respondent’s taping behavior. The average acceptability rating of each of the five actions tested

was a full point higher among respondents

who had made tapes in the past year than it

was for persons who had made no music

tapes. Nevertheless, among nontapers the average acceptability rating of taping one’s own
g pgg

copies to others was viewed by the nontaper as

being on the edge of the acceptable range (4.6

to 4.8). Only taping to sell was rated as unacceptable by nontapers (see table C11-3).

It is also instructive to note the attitudes of

those who purchase prerecorded music within

the past year. They considered all of the copying situations described, except for taping to

sell, as acceptable forms of behavior. Those

who were more critical of music copying were

respondents who had not bought any recorded music in the past year.

These survey findings clearly showed an underlying set of social norms that were supportive of home taping of music. They appeared

to reflect a set of feelings about the rights of

ownership. There seemed to be agreement

among the public that a person who purchased a recording had the right to make copies for his own, or a friend’s use. The public

did, however, draw the line at using home taping for profit, i.e., making copies to sell. This

survey finding paralleled qualitative findings

from focused group discussions in which tapers and nontapers agreed that taping “to

save money” was acceptable, but taping “to

make money” was wrong.

Fairness of Taping

Respondents were also asked their opinion

concerning the fairness of the present situation for each of three affected parties— the

recording industry, song writers and performers, and the average consumer. The specific

question appears in table C11-5.

There did not seem to be a consensus about

the fairness of home taping to any of the affected parties. Slightly more of the respondents felt that current practices were fair to

the artists and industry than felt that they

were unfair, but nearly a quarter had no opin

ggpp

tended to see the current practices of home

taping as fairer to everyone than did the nontapers. Similarly, buyers of recorded music

tended to see the current situation as fairer

than did nonbuyers. No one, however, seemed

to see fairness as a clear enough issue to come

down on one side or the other for any of the

parties.

Attitudes Toward Policy Changes

A number of alternatives have been proposed for either discouraging home copying of

prerecorded music or compensating copyright holders. To gauge public opinion concerning a range of alternative directions for

dealing with home taping, the adult (17 or

older) members of the sample were asked:

“Now using the same scale running from one,

meaning not at all fair, to 7, meaning perfectly

fair, I’d like to know how fair each of the following suggestions would be, or don’t you

have an opinion?”

A majority of the survey respondents considered the alternatives of limiting recording

technology as unfair. A majority (56 percent)

considered the suggestion that “new audio recorders should be built so they can’t copy

commercial recordings” as being in the unfair

range (i.e., 1 to 3) with 42 percent rating the

option as not at all fair. Similarly 55 percent

found it unfair that “audio recordings should

be made so they can’t be copied.” This included 41 percent who considered the approach not at all fair (see table C11-8).

The suggestion of compensating copyright

holders for losses due to home taping through

new fees on products also met with disapproval from a majority of the respondents.

Fifty-seven percent considered it unfair that

“a fee should be charged on audio recorders

and paid to copyright holders to compensate
The suggestion that “a fee should be

charged on blank audiotapes and paid to

copyright holders to compensate them for

home taping” also met with majority disapproval. Nearly 6 in 10 (59 percent) of the sample of adults considered this suggestion unfair, with 48 percent considering a fee on

blank tapes not at all fair.

The majority of the respondents thought it

fair that “current home taping practices

cent rating it as perfectly fair.

It is noteworthy that none of the alternative

approaches of limiting recording technology

or imposing new fees seemed to have an identifiable constituency among the public. In

general, tapers, purchasers of prerecorded

products, and nontapers seemed to feel that it

was fair to leave current home taping practices unchanged (see table C11-9).
Chapter 7

Economic Perspectives on

Home Copying
Page

INTRODUCTION ● * * * * a * * * * * . . . * * . * * * * * . . . . . . . . . . . . . . . . . . . . . . . . . . 169

STAKEHOLDER STUDIES ● ***m O*** ..*. *.m**** *.*e. *.m. **. *.*. **. m 170

Points of Contention ● 8*, **. *.. . a**********.*.....*..,...**..**. 172

LITERATURE ON HOME COPYING ● . * * . . * . * . * * * . . . . . . ., * * ***.,..*. 176

The Effect of Private Copying on Welfare ● ***. ***. m.. *. **m*..***** * 176

Appropriability and Pricing ● . **.00*******..***.*...******.. . 178

Price Discrimination, Resource Allocation, and Variety. . . . . . . . . . . . . . . 179

ANALYZING THE ECONOMIC EFFECTS OF HOME COPYING . . . . . . . . 180

Home Copying and Its Economic Effects ● 0 ** 9.**...**..*..***,  180

Home Copying and the Demand for Originals . . . . . . . . . . . . . . . . . . . . . . 184

Consumer Welfare and Audio Home-Copying Restrictions . . . . . . . . . . . . 191

Figures

Figure Page

7-1. Overview of the Audio Format Decisionmaking Process . . . . . . . . . . . . 193

Table

7-1.

7-2.

7-3.

7-4.

7-5.

7-6.

7-7.

7-8.

7-9.

Tables

Page

Variable Description and Statistics ● ** ..*.*.***....**.*....*..*.. 188

Tobit Estimates of Original Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Three-Stage Least Squares Estimates of Original Purchases. . . . . . . . . 189

Tobit Estimates of Taping Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

Three-Stage Least Squares Estimates of Taping Behavior. . . . . . . . . . . 190

Sample Summary Statistics ... ... .b b . . . . . . . . . . . . . . . . . . . . . . . . . . 196

Multinominal Logit Estimation Results for Individuals Not

Having a CD Player in Home or Car ● . ***m*..*.*...****.***..*.. 197

Multinominal Logit Estimation Results for Individuals Having

a CD Player in Home or Car .**** .*** ***. . . * 9 * * * * * * * * * *.**.*.., 197

Choice-Probability Elasticity Estimates for Individuals Not

Having a CD Player in Home or Car ... **. m . . . . . . . . . . . . . . . . . . . . . 199

7-10. Choic-Probability Elasticity Estimates for Individuals Having

a CD Player in Home or Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

7-11. Hypothetical Changes Absent Home Music Taping (All Sources) -

Short Term Only ● 9*** *0** *b*** ***9* **.099 **..9**,*.*..,*.*.* 202

7-12. Hypothetical Changes Absent Home Music Taping From

Prerecorded Sources - Short Term Only . . . . . . . . . . . . . . . . . . . . . . . . . 204
INTRODUCTION

Economic harm-the “effect of the use

upon the potential market for or value of the

copyrighted work” — is one of four criteria

considered by the courts in determining

whether a use is a “fair use)’ and not a copyright infringement.1 Consequently, much of

the debate on home copying of audio and

video materials has focused on economic

analyses supporting or rebutting copyright

owners) claims of economic harms. Because

home copying is a private use, applying the

fair-use defense may be premature.2 Some,

nevertheless, do believe that the doctrine of

fair use, as the “safety valve” of the copyright

law, is able to deal with home copying and

other private uses.3

New technologies and new private uses convey benefits as well as harms to various classes

of right holders and users. These affect society’s economic welfare. Choosing an appropriate balance of harms and benefits is a political decision, not a technical one, in which the

public has a stake.

Defining the legal status of private uses

(like home copying) will involve weighing the

effects on stakeholders of possible measures

to restrict private uses against the consequences of not restricting them. Narrowly defining the legal status of a particular kind of

home use (e.g., making digital copies of

prerecorded music) would not resolve parallel

issues for other technologies and industries.

This chapter explores the economic impli

cations of home audiotaping and home copying in general. To do this, OTA commissioned

Michael Katz, William Johnson, and Fred

Mannering to conduct three independent economic analyses and analyzed several other

studies performed by industry groups and private individuals.

All three of the economic analyses done for

OTA illustrate a common theme: In considering whether—or how— to adapt the law or

technology to address home copying, it is as

important to identify the ambiguous consequences of any proposed change as it is to

quantify the more certain ones. Katz develops

a theoretical framework for analyzing the economic effects of home copying, and shows how

the possible effects on various stakeholders

depend critically on the underlying assumptions about supply and demand. Johnson develops a theoretical framework for analyzing

the effects of home copying on the producers

of original recordings and uses the OTA survey data to examine some factors that influence copying and purchasing behaviors. Mannering develops a model of consumers’ choice

between purchasing and taping music and

uses the OTA survey data to estimate the

value consumers place on homemade tapes.

Mannering’s estimate of consumers’ valuation of homemade tapes is used to estimate

the hypothetical economic effects on consumers and society from eliminating home taping.

‘Title 17, U.S. Code, Sections 107 ( 1)-(4).

2* ~h. 3, ~d ~W: us, con~e~s, Offlce of TWhno]om Assessment, lntellec~al bper~ Rights in an Age of Electronics andlnforrnation, OTA-CIT-302 (Melbourne, FL: Kreiger Publishing CO., April 19~), PP. 193-198. The 19~ OTA report concluded that new

informationdissemi nation and reproduction technologies pose a number of legal challenges. One, the “problem of private use, ”

sterns from growing home access to copyrighted electronic information, coupled with inexpensive copying and transmission. The legal

problem arises because these technological changes raise the question of how far copyright proprietors’ rights should extend over

private uses, and the copyright legislation provides meager guidance.

a~]e~ hwm is sti]] re]evmt t. the de~te, In considering whether copyright proprietors’ exc]usive rights should extend over

private uses, Congress might wish to take the economic consequences of private uses into account.

169
gy 

in a manner comparable to earlier recordingindustry studies, along with effects on blanktape revenues, consumer benefits, and society’s economic welfare.

The effects of private use, including home

copying, on the efficient allocation of resources and society’s economic welfare are

complex and ambiguous. Even for one specific

type of copying-home audiotaping–using

survey data to estimate its effects on industry

revenues or consumer benefits involves many

assumptions and approximations. Choosing

among assumptions about underlying factors

is a subjective process. Some of the most crucial factors are very difficult to measure and

several alternative assumptions may be

equally plausible— for example, the extent to

which consumers would increase purchases of

recorded music, absent home taping. Thus,

the same survey data can support disparate

estimates, and this type of uncertainty is unlikely to be reduced by more data.

STAKEHOLDER STUDIES

By 1986, industry stakeholders-both individual firms and industry associations — had

pyg g

tended to show the alleged harm or losses that

the sponsors incurred as a result of home

copying.5 In the 1986 study, OTA noted discrepancies among these analyses, each of

which used different methodologies, and

which often focused on a specific product or

market. More important, OTA noted:

“...[A] consideration of the beneficial effects of

new technological uses to either new or existing markets for intellectual property is often

absent from such estimates. Although the

videocassette recorder [for example] may give

rise to copying, it also permits the exploitation

of markets that would otherwise not exist.

Both factors must be taken into account in

considering harm. The policy maker is therefore still left with a decision over who will

benefit from new technological uses, and for

what reasons. ”6

Several of these analyses of alleged harm to

the recording industry due to home taping

were presented and debated during hearings

on copyright and home taping in the 97th,7

98th,8 and 99th9 Congresses. At each hearing,

Alan Greenspan presented the results of the

most recent analysis done for the recording industry by his firm, Townsend & Greenspan.

In the 1985 analysis, sponsored by RIAA,

4See table & 1 in ch. 6 of this report and OTA-CIT-302, op. cit., footnote 2, pp. 201-203, for summaries of these.

sThere has t=n subs~ntla] di=Weement as to whether harm should be used to determine rights, and where the burden of pr~f

should lie.

‘OTA-CIT-302, op. cit., footnote 2, p. 201.

7“Copyright Infringements (Audio and Video Recorders),” Hearings before the Committee on the Judiciary, U. S. Senate, 97th

Cong,, 1st and 2nd sess., on S. 1758 (A Bill to Amend Title 17 of the U.S. Code to Exempt the Private Noncommercial Recording of

Copyrighted Works on Video Recorders From Copyright Infringement), Nov. 30, 1981 and Apr. 21, 1982, pp. 917-971.

a“vida and Audio Home Taping,” HeMing before the Subcommittee on Patents, Copyrights, and Trademarks of the Committee on

the Judiciq, U. S. Senate, 98th Cong., 2nd sess., onS.31 (A Bill to Amend Title 17 of the IJ.S. Code With Respect to Home Recording

and Video and Audio Recording Devices and Media, and for Other Purposes) and S. 175 (A Bill to Amend Title 17 of the U.S. Code to

Exempt the Private Noncommercial Recording of Copyrighted Works on Video Recorders from Copyright Infringement), Oct. 25,

1!)83, pp. 107-244.

“’Home Audio Recording Act,” Hearings before the Committee on the Judiciary, U. S. Senate, and its Subcommittee on Patents,

Copyrights, and Trademarks, 99th Cong., 1st and 2nd sess., Hearings on S. 1739 (A Bill to Amend Title 17 of the U.S. Code With R.E+

spect to Home Audio Recording and Audio Recording Devices and Media, and for Other Purposes), Oct. 30, 1985, Mar. 25 and Aug. 4,

1986, pp. 146-176.
q, pg

retail price of $6.80.10 On the basis of an earlier report on home taping by the firm Audits

& Surveys, Townsend& Greenspan estimated

that 42 percent of all home tapings from

prerecorded material and 40 percent of offthe-air (broadcast) tapings would have generated sales, if taping had not been possible.11

Then, assuming that 40 percent of home taping in 1984 was in lieu of purchases of records

or prerecorded cassettes, the firm estimated

1984 retail losses of some $1.5 billion. This figure included $200 million in losses due to record prices being depressed 5 percent below

what they would have been, absent taping.12

Greenspan estimated that about 40 percent of

these retail losses (about $600 million) represented compensable losses to copyright owners and creators; this proportion was based on

estimated lost revenues (net of manufacturing and distribution costs) using a hypothetical industry income statement. Moreover, as

in his earlier testimonies, he stated that continued home taping had grave implications

for the viability of the recording industry.

Noting that recording-industry releases were

),

Greenspan stated that further growth in

home taping would cause further decline in

these industry indicators. He concluded that

the industry itself could not successfully respond to home taping with a pricing strategy.

Raising prices to recoup losses would reduce

sales and might increase home taping, and

lowering prices to make taping less attractive

would cut profits further and decrease the industry’s capabilities to take the risks required

by the nature of the business.13

Greenspan’s two earlier studies had estimated losses to the recording industry

amounting to $1.05 billion for 1981 and $1.4

billion for 1982. The Consumer Electronics

Group of the Electronic Industries Association (EIA), the Audio Recording Rights Coalition, and the Home Recording Rights Coalition (HRRC) submitted dissenting comments

and testimony disputing these estimates. In

the first instance, EIA argued that taping estimates based on hypothetical questions and recall were unreliable and exaggerated the

amount of taping actually done. Furthermore, EIA claimed that the analysis

IOIn this Ca]cu]ation, a b]~k tape was assumed to hold 1.875 album-equivalents.

11 “Home Taping in America 1983: Extent and Impact,” Audits& Surveys (New York, NY: October 1983). The report was based on

diaries of taping activity over a l-month period from a sample of active tapers, as well as personal interviews and an in-home audit, of

all tapes in the respondents’ homes.

Earlier estimates of taping and displaced sales had been based on a consumer mail survey sponsored by Warner Corn munications,

Inc. (WCI): M. Fishbein, S. Middlestadt, and M. Kapp, “AConsumer Survey: Home Taping,” WCI (March 1982), m reported in “ 1981

Estimate of Less Due to Taping: Tapers’ Reports of Replacement (Executive Summary ),” (Los Angeles, CA. WCI, April 1982).

12GrWnsPn c~cu]at~ that the avera~ ~nll~ price increa~ of all goods and services in the consumer price index wtiS 6.7 ~’rcent

from 1978-1984, while average prices of prerecorded ta~s rose only 2.2 percent. According to Greenspan, “Had average prerecorded

tape prices paralleled the general rise in consumer prices in 1984, they would have been 29 percent higher than t hey in fact turned out

to be. ”

In general, failure of retail prices to match increases in the consumer price index does not always mean a decline in profit margins.

Also, macroeconomic conditions (such as the recession during 1979-1981) can have a different effect on demand for entertainment

(e.g., records and bpes) than on other items in the price index (e.g., food).

Greenspan also concluded that the recording industry’s recovery since the early 1980s did not indicate that the “taping problem”

had eased; rather, his analysis indicated that taping had reduced pretax profits, even during the recovery. Green span estimated that

the proposed home-taping levy in S. 1739 would yield some $200 million per year. See Hearings on S, 1739, op. cit., footnote 9, pp.

154-156,

13Hew1nm on s, 1’7~~, op. cit., fOOtnf)te 9, pp. 155-56.
pgp

and tapes made for portable or car tape players) are not substitutes for prerecorded products.14 In the second instance, Greenspan’s estimate of harm was rebutted by a panel

representing HRRC and the Audio Recording

Rights Coalition. The panel argued that the

Audits & Surveys data used by Townsend &

Greenspan were flawed and overstated the potential for sales displacement, and that the

analysis ignored the stimulative effects of taping on sales and other benefits.15

HRRC and EIA contended that the new

Townsend & Greenspan analysis of alleged

harm for 1984 was subject to the same flaws

as the earlier ones. They did not, however, offer any new empirical estimates.

Points of Contention

A pattern emerges in these debates. The

published recording industry arguments and

economic analyses deal only with estimates of

alleged harms to the recording industry and

copyright proprietors that arise from substituting home copying for purchases of

prerecorded music. These alleged harms include lost sales, depressed prices, lower profit

margins, and, ultimately, a decline in the

number and diversity of new recordings being

released. Survey data and models are used to

estimate the extent of copying and the num

pgg

Although representatives of the hardware

and blank-tape industries argue that the recording industry’s figures are inflated, they

have not published their own estimates of

either economic harm or tangible/intangible

benefits from home copying. Instead, they

contend that when the effects on the recording

industry and on consumers are considered together, there are net economic benefits to society. They argue that economic analyses used

for policymaking must examine the costs and

benefits to the various stakeholders.16 Their

arguments propose several hypotheses about

social (and recording industry) benefits from

home taping. Because these hypotheses are

not quantified, they cannot be compared with

the recording industry’s estimates of economic harm.

As an example of these lines of argument,

one remedy proposed by the recording industry, songwriters, and music publishers is a

surcharge on the price of a blank audiotape.17

The rationale for this hinges on the assumptions that:

. home taping is a

purchase,

. most blank tapes

direct substitute for a

sold to consumers are

used to copy copyrighted material, and

therefore

ltHe~inW on S. 1758, op. cit., footnote 7, pp. 956-970.

19He~ings on s.s 1 ~ds. 175, Op. cit., footnote 8, pp. 340-467. The Audits & Surveys study for RI/3A concluded that he-ming home

tapes was an almost negligible factor in decisions to purchase (Audits & Surveys, op. cit., footnote 11, pp. 14-15).

IWited examples include, for example, economic harm to the recording industry from lost sales and benefits to the recording industry from technological innovations in hardware that open new markets, benefits to consumers from a wider set of choices and lowercost access to music, etc. (Hearings on S. 1785, op. cit., footnote 7; Hearings on S.31 and S. 175, op. cit., footnote 8.)

17A “Joint s~t.ement of the Music Publishers’ Association, Inc., Recording Industry Association of Ameri% Inc., tmd songwriters

Guild of America Re: S. 1739, The Home Audio Recording Act,” testimony before the Subcommittee on Patents, Copyrights, and

Trademarks of the Senate Committee on the Judiciary, Oct. 30, 1985, pp. 49-62.
In arguing the fairness of blank-tape surcharges, proponents claim that most consumers tape to save money and that they would

have purchased a recording if they were unable to copy.

In opposing such proposals, HRRC and EIA

contend that home taping does not compete

directly in the market for prerecorded music. 19 They argue that consumers do not regard homemade tapes as perfect substitutes

for prerecorded products: tapes can be reused,

so home tapes may not be permanent additions to a consumer’s music library. In addition, they contend that consumers’ taping

practices are such that the content of home

tapes differs from what is commercially available and that consumers often tape material

that they would not have purchased. They

also contend that home taping can stimulate

demand for prerecorded products. Asserting

that it is not prohibited under current law,

they point out that home taping offers significant intangible benefits to consumers by diversifying the choices available to them via

“selection-taping,” as well as the settings and

forms in which they can enjoy music via

“place-shifting.“ “Selection-taping” is making a tape with selections from one or more

different artists or albums; “place-shifting” is

purchase some recordings on the expectation

that they can be copied for these purposes and

that consumers are unlikely to purchase copies of the same recording on different media

(e.g., a CD or record for home use and a tape

for the car). RIAA, on the other hand, disagrees with these arguments. It views hometaping practices such as “place-shifting” as

violations of copyright or, at best, of uncertain

legal status, but certainly not condoned under

the current law.20

One area of continuing disagreement is

whether only the effects of home taping (or a

taping ban) on recording-industry revenues

should be considered for policy formulation,

or whether effects on blank-tape revenues and

consumers’ economic welfare should also be

considered. A corollary to this disagreement is

whether alleged lost revenues or lost profits

and royalties should be used in considering

“harm.”

Viewing home taping as a violation of current copyright law, RIAA believes the absolute protection of copyrighted music and recordings to be the only relevant issue.

Therefore, RIAA maintains that policymakers should only take into account the effect on record industry revenues, reflected in

I a~me Vwimts of this Uwment involve tape qualities and likelihoods of taping copyrighted material% given tape type.

For a discussion of the relative merits of blank tape and/or recording equipment fees and criteria for determining them, see: Timothy J. Brennan, “An Economic Look at Taxing Home Audio Taping,” Journal ofB madca.sting & Electrvnlc Mediay vol. 32, Winter 1988,

pp. 89-103.

~ gIn lg82, the Audio hording Rights Cm]ition sponsored a telephone survey of audio tapers, intended to explore the tastes and

practices of tapers (including the stimulative effect of home taping on purchases), but not to estimate the absolute amount of home

taping in the United States: “Why Americans Tape: A Survey of Home Taping in the United States,” Yankelovich, Skelly, and White,

Inc., September 1982. Yankelovich, Skelly, and White reported the following results: (1) more than half of all home audiotapingdoes

not involve prerecorded music; (2) home taping stimulates purchases of prerecorded music; (3) home tapers tape primarily to put

together their own program of selections; (4) tapers also seek portability, convenience, quality, and availability t hrough home taping,

(5) sating money is not the primary motive behind home music taping and (6) half of all home tapes of prerecorded music are made

from the taper’s own record or tapes.

mH. ~sen, Recording IndustW Association ofherica, Inc., letter to J. Winston, OTA, May 2, 1989 (enclosure ~th comments on

drafl ch. 8, p. 2).
law. Furthermore, they hold that studies of

the effect of taping on the recording industry

should consider only the effects on industry

profits and royalty payments to performing

artists and creators of works, rather than

gross revenues to recording companies. They

argue that the former incentives determine

the long-term supply of new works.22

The difference in relative magnitudes (gross

revenues versus profits and royalties) is substantial. Greenspan estimated that 40 percent

of alleged lost revenues represented “compensable” losses to copyright owners and creators

(including the recording companies). Considering the recording industry’s rule-of-thumb

that royalty payments to the performing artists and copyright owners amount to about 20

percent of the wholesale price of a recording

(see ch. 4), the 40-percent-of-revenues figure

for profits and royalties seems high.

Some of the major unresolved questions

from previous surveys and analyses stem

from their underlying assumptions, as well as

from the survey designs. For example, the

RIAA surveys examined homemade tapes,

while the HRRC survey examined home-taping incidents (’Tapings”), so the results are

not comparable. One important line of argument has concerned the efficacy of proposed

levies in furthering the intent of copyright by

providing incentives for the creation and dissemination of new works. Other differences

have been methodological, concerning the

construction of:

. Measures of the amount of blank media

of various qualities purchased by con

answering machines or to tape a baby’s

first words).

Measures of motivations for home taping, intended to test hypotheses as to

whether home tapes displace or stimulate purchases.

Measures of the amount of home taping

being done and of taping patterns (e.g.,

selection-taping versus album taping,

taping owned versus borrowed recordings, etc.).

Measures of the extent to which taping

stimulates purchases, or of estimated

lost sales revenues from taping displacing purchases.

OTA concludes that the studies by the RIAA

and EIA/HRRC are insufficient as a basis for

policy making, for the following reasons:

● The methodologies and data for the surveys that were used as the basis for the

studies were not published in their entirety, including details of the survey design and response rates, complete questionnaires, and disaggregate responses

to all the questions asked. Therefore, independent replication of results and/or

alternative analyses by disinterested

parties are not possible. Because the

studies were sponsored by those with a

financial interest in their outcome, questions of bias in their design, execution, or

reporting arise; the inability to independently replicate results leaves these

questions open.

21H. ~=n, &o~ingInduStv ~wiation of ~erica, Inc., ]etter to OTA,May 2, 1989 (enc]osure with commentson draf?, ch. 8, pp.

1-2).

22GW J Shapiro, ~~~s. &hw~z, Steven R. Brenner, Home Recording Rights Coalition, memorandum to OTA with comments

on economic issues, May 1, 1989, pp. 7-10.
●

●

●

y(ppgp

tively), in part because the analyses

based on these data were intended to explore different mechanisms (e.g., sales

displacement versus stimulative effects).

Therefore, even if the RIAA and HRRC

studies are equally valid, it is not possible to reconcile their disparate findings.

The studies do not explore the effects on

net economic welfare of home copying,

or of proposed policies to restrict or

eliminate it. Given that the current legal

status of home copying is ambiguous, it

is appropriate and reasonable to examine the effects on consumers, as well as

on industry.

The focus on active tapers, as opposed to

the general population, does not permit

analysis for the population at large. By

surveying only active tapers, the studies

do not fully consider consumers’ motivations for taping versus purchasing–in

particular, why some consumers do not

tape, and whether tapers and nontapers

have different perceptions of the acceptability or fairness of home-taping practices. 23

While the recording industry’s economic

analyses of harm project increases in

sales absent home copying, the estimates

of lost sales revenues do not take into account the effect of price changes on the

number of recordings purchased. The estimates assume that sales volume would

increase substantially absent home tap

gpyg

bought fewer recordings in response to

these price increases then using the original estimate of increased sales volume in

conjunction with higher prices overstates foregone revenues. Also, the RIAA

estimates are of lost revenues, not lost

profits, and the published analyses do

not provide sufficient data to allow an independent estimate of profits.

The OTA survey and economic analyses

were designed to remedy the first four of these

points. OTA chose a population-based sample

for two reasons: i) so that, where appropriate,

the results would be applicable to the population at large, and ii) so that nontapers, as well

as tapers, would have the opportunity to express their views. Including both tapers and

nontapers is especially important in order for

the OTA survey to shed new light on public

perceptions about the fairness of home-copying practices and alternative policies.25 The issue of sample design, however, was one of the

most hotly contested aspects of the OTA survey’s development. Both RIAA’s and HRRC’s

view, shared by some of the other outside reviewers, was that the sample should consist of

active tapers only, to get a larger number of

observations of taping, given the study’s limited resources. OTA’s view, shared by some

other outside reviewers, was that this advantage would be outweighed by the disadvantages of not being able to project results to the

general public and, more important for a

study for Congress, of ignoring the opinions of

perhaps half the public.

Zqhe OTA ~mp]e design was chosen to allow projection of sample results to the population at krge. TO ~0 SO, it is necessary to know

each respondent’s presumed probability of selection (for example, based on Census profiles); for a sample of tapers only, t his would be

unknown. Therefore, the OTA sample consisted of randomly selected members of the public, including both tapers and nontapers.

24w heminw on S. 1739, op. cit., f~tnote 9, pp. 152-154 for details of the ]% estimates.

250TA had commlssion~ a phone Suwey on the Pub]ic’s fami]i~ity with and accept~ce of inte]]~tua] property rights, perceptions of a problem, and views on solutions, for the 1986 report. See “public Perceptions of the ‘Intellectual Property Rights’ Issue, ”

The Policy Planning Group, Yankelovich, Skelly, and White, Inc., February 1985.
prices are held constant, the use of alleged lost

revenues (as opposed to profits and royalties)

is contentious, as was mentioned above. One

way to address this in a comprehensive analysis of the economic effects of home copying

would be to compare current sales volumes,

variety, costs, and prices with those where

copying had been eliminated or restricted several years earlier. Even if such a comparison

were possible, the analysis would require industry data over those years on both costs

that varied with production volume and those

that did not,27 along with data on retail transactions.28 Even then, it would be virtually impossible to establish accurately the relationships between possible financial incentives

and the supply of new creative works, or to estimate the benefit to society from the additional “investment” in creative works (see the

section below on private copying and social

welfare). Absent these industry data, both the

OTA and contractor analyses had to focus on

changes in industry revenues and could notestimate the changes in the demand for recordings as a result of changes in prices or the impact on the long-term supply of creative

works. Although the results of our analyses

ering policy options.

LITERATURE ON HOME

COPYING

Several recent papers, prompted in part by

the debates over home audio- and videotaping, have examined the economics of home

copying.29 Because economic effects of copying are complex and often ambiguous, these

analyses usually rely on simplifying assumptions or specific conditions to reduce ambiguity. Therefore, the results must be interpreted

in light of these assumptions and conditions.

The Effect of Private Copying

on Welfare

Intellectual property is an example of the

private production of a public good.30 For intellectual property, ordinary market forces

will not necessarily produce the most desirable social outcomes. Granting a limited monopoly via copyright attempts to balance distortions arising from the partial inability of

~W the discussion of Mannering’s analysis below.

270TA rewest~ ~st md Vwiety dam from the recording industry, but was only able to obtain the general, rule-f-thumb information presented inch. 4. Naturally, the firms hold this information closely. (OTA stdl’interviews with recording-industry and RI&l

executives, MayJune 1988. )

za~b]ished re~] s~tistics from the Nation~ Association of Recording Merchandisers (NARM) do not include this information.

R.JJW industry data report shipments valued at suggested list price; retailers typically discount from list price. It is possible to construct approximations over a series of years using discounting rules; however, industry production cost data for a number of years

would still be required.

z%~W: OTA-CIT.302, Op. cit., fmtnote 2, es~id]y ch. 6; and an OTA contractor report prepared for the 1986 assessment, “Eo

nomic Issues Relating to New Technologies and Intellectual Property,” Stanley M. Besen, contractor report prepared for OTA by the

Rand Corp., Dec. 1984 (Springlie]d, VA: National Technical Information Service, 1986).

~For a dinssion of pub]ic @s, see The New Palgmue: A Dictiona~ of Economics, John Eatwell, et d., editors (The Stockton

Press, NY: 1987), pp. 1061-1066. A public good isonethat is nonexclusive: once it is produced, it isimpossible (or prohibitively costly)

to exclude any individual from benefiting from it, whether or not he pays. Individuals have an incentive not to pay for the good, or to

undervalue it, in hopes of getting access as “free riders. ” This results in inelllcient resource allocation and underproduction of nonexclusive goods, and underlies the rationale for public support of activities like national defense and scientific research.
gy y pp

priate returns from intellectual property

would result in the underproduction of new

works.

In the long run, the effect of unlimited copying on society’s economic welfare is ambiguous. It depends on a number of factors, including the degree to which copying affects the

demand for originals, the degree to which

copying affects the production of new works,

and the degree to which consumers value additional variety.32

The net social welfare effect of copying has

two components: the effect on producers and

the effect on consumers. Changing the

amount of private copying (either increasing

or restricting it) will affect not only the net

level of society’s economic welfare, but also

the relative balance between producer and

consumer welfares. This balance between

gains and losses for producers and consumers

is often the most visible and most hotly contested feature of proposed policies for redistributing the benefits from home taping. The

specific effects of private copying on the economic welfare of producers and consumers

depends on several factors:

c

●

●

●

●

gpp

distribution costs (i.e., whether private

copying is economically efficient or inefficient).

Whether producers increase the price of

originals to reflect the value of copies

made from them, or whether producers

reduce prices in an attempt to discourage copying.

Whether producers charge different

prices for the same good, at least to copiers and noncopiers.

To what extent copying is a substitute

for a purchase.

How consumers vary in their copying

costs and tastes.

Whether the additional variety of originals offered absent private copying

would be “excessive” in economic

terms.33

Does increased copyright protection for

goods like musical recordings and software increase or decrease society’s economic welfare?

Some claim that improvements in copyright

protection will:

31 ~~ote~ that ~onexc]usivity n~ not tie the hands of policy m~ers. For ex~p]e, in some other countries where it was not

deemed possible or desirable to prevent home taping, a royalty system was instituted with the intent of (at least partially) compensating for nonexclusivity. (H. Rosen, Recording Industry Association of America, Inc., letter to OTA, May 2, 1989, enclosure with comments on drafl ch. 8, pp. 12. )

32%, Wi]]im R, Johnmn, “The Economics of copying,” Journal of politi~l E~nomy, W)]. 93, No. 11, l%?), pp. 158- 1’74. Johnson

examines two models for copying to help explain why some consumers copy while others do not. The first model assumes that the cost

of copying varies according to individuals’ values of time. The second model assumes that large freed costs must be incurred (e.g.,

purchase of recording equipment) to copy, but copying is subsequently costless. Johnson concluded that, for both models, copying

redistributes income away from copyright proprietors, although the effects of copying on the prices of originals and on social welfare

are ambiguous.

33* Sm]ey M. Besen, “Private Copying, Reproduction Costs, and the Supply of Intellectual Property, ” Information Economics

and PoLicy, vol. 2, 1986, pp. 5-22. For example, Besen notes that copying will increase consumer welfare and producer profits in the

short run, if private copying is eflicient and the price of originals can be raised to reflect the value of the copies. On the other hand,

copying may cause producers to reduce prices; this decreases both consumers’ and producers’ welfare. If, however, copying (by reducing the number of originals produced) reduces “excessive” variety, this can increase welfare in the long run.

The recording industry considers that consumers of its product have always valued additional variety and that, “excessive variety, if

it exists, is an issue of business strategy for individual record companies, not a social welfare problem. ” (H. Rosen, Recording Indust~

Association of America, Inc., letter to OTA, May 2, 1989, enclosure with comments on draft ch. 8, p. 3.)
●

y y gp

some consumers can use them without

paying, and

increase the loss to society from underutilization of these works — the loss due to

consumers who would be willing to buy

the good at a lower price34 but do not consume it at the given price, plus the loss

due to consumers who spend more real

resources copying than the producer

would to make an additional unit of the

good.

Novos and Waldman consider a case in which

consumers differ only in terms of their costs

of obtaining a reproduction (not in their valuations of the good), and in which private copying is economically inefficient. In this instance, increased copy-right protection could

lead to a decrease in the social loss from underutilization, provided that all individuals

continue to consume the good.35

More generally, Novos and Waldman find

that policies to increase copyright protection

face a trade-off between losses due to underproduction and to underutilization. New

copying technologies have tended to increase

the former and to decrease the latter. If copying is inefficient, however, an improvement in

copyright protection does not necessarily increase the underutilization loss. Also, if improved protection reduces the demand for

Overall, then, the implications of increasing

copyright protection are complex, and the

policy trade-offs are not simple. In some

cases, market outcomes (where different

classes of consumers are charged different

prices of a good, such as journals, or where

copyable and noncopyable goods, such as

computers and software, are bundled) may be

preferable to increased government enforcement.36 In choosing between government and

industry actions to prohibit copying, Novos

and Waldman conclude that the government

should act when its cost of doing so is lower

than the producer’s cost of altering the product.37

Appropriability and Pricing

Private copying need not be harmful to producers, if copying is efficient and if producers

can increase prices to take into account the

value of the copies that will be made.38 If not

all consumers copy, or if consumers vary in

the number of copies each makes from an

original, then efficient pricing would require

discriminating among these groups, charging

them different prices according to their valuations of the originals, based on their ability

to make copies. This type of price discrimination is usually infeasible, however, because it

is costly and difficult to gather the necessary

information on users’ valuations of originals.39

34More ~Fi~c~]y, who Wou]d IE Wl]]ing to pay the marginal cost of producing an additional unit of the good.

351m E. Novos and Michae] Wddman, “The Effects of Increased Copyright Protection: An Analytic Approach, ” JOUnal of poli~l

Economy, vol. 92, No. 2, April 19S4, pp. 236-246.

*W~W *sen ( lgs4), op. cit., footnote 29, Pp. 13-23.

371m E. Novos ~d Michae] w~dmm, “l”he Emer~nce of copying Techno]o@es: what five we bmrrwd?’’co~k?~po~~ poli~

Issues, vol. 5, July 1967, pp. 34-43.

aagee ~sen ( 1986), op. cit., footnote 33, p. 7.

~he inability to practice perfect price discrimination among users can produce imperfections in markets for intellectual property.
able to segment their customers into two

classes and maximize profits by charging each

a different price.40 Looking at the effect of

photocopying on the number of scholarly

journals purchased, Liebowitz has examined

journal publishers’ ability to indirectly appropriate copiers’ true valuation of originals

through higher subscription prices to libraries and institutions. He concluded that publishers can indirectly appropriate revenues

from copiers who do not directly purchase

journals. Since copying may have different effects on other media, however, case-by-case

empirical investigation of the institutions and

markets involved may be necessary.41

Price Discrimination, Resource

Allocation, and Variety

The inability to charge different classes of

consumers different prices for a good in intellectual-property markets means that the

prices consumers pay need not reflect their actual valuations of the good: some value the

price will not consume it. If they could be offered a lower price reflecting their valuation,

however, then they would purchase it and

both producers and consumers would be better off. Moreover, the decoupling of prices and

valuations makes resource allocation — decisions about what to produce — more difficult

and markets less efficient.42

Besen’s analysis for the 1986 OTA report

noted that where there are many producers of

competing types of intellectual property, the

resulting market structure is one of monopolistic competition: firms will have some control over the prices they can charge because

their products are differentiated (e.g., music

by different recording artists or groups).

When firms are unable to charge different

consumers different prices, however, there

may be either excessive or insufficient variety.43 Under these conditions, when private

copying serves to reduce the variety of products being offered, it does not necessarily reduce the efficiency of supply or make consumers worse off.44

4%ee Walter Y. Oi, “A Disneyland Dilemma: Tw*Part Tariffs for a Mickey-Mouse Monopoly, ” Quarterly Joumai of Economacs,

February 1971, pp. 77-94. Oi describes how Disneyland’s (then-) prevailing plicy of charging separate admissions and ride prices

could be optimal for a profit-maximizing monopolist. This was possible because customers varied in their tastes and could be divided

into two groups, based on their valuations of going on a large number of rides.

41 S. J, Lie~witz, “copfing and h-direct Appropriability: Photocopying of Journals, ” Journal of Political Economy, vol. 93, No. 5,

19s5, pp. 945-957.

4%ke Besen (1984), op. cit., footnote 29, pp. 1-4. See also Stanley M. Besen, Willard G. Manning, Jr., and Bridger Mitchell, “Copyright

Liability for Cable Television: Is Compulsory Licensing the Solution?” (Santa Monica, CA: The Rand Corp., February 1977). The

authors note that congressionally mandated compulsory licenses for some uses (such as cable retransmission) are less efficient than

requiring negotiations through full copyright liability. This is because consumers’ willingness to pay for programs is perceived only

indirectly by program suppliers.

‘o~ere it is ~sslb]e to charge copiers and rloncopiers different prices, the interests of these groups of consumers could ~ de-coupled (Besen (1984), op. cit., footnote 29, p. 19). As a practical and marketing matter, however, this has not yet been tried for recorded

music.

‘ZW ~=n ( 19M), Op. cit., fmtnote 29, pp. 4-5. Entry (new firms, new products) will be profitable when new entrants can attract

enough consumers from the incumbents to cover their costs, even if these exceed the value that consumers place on the additional

variety. If excessive variety is being offered and if private copyingthen causes producers ta decease the variety of products offered, the

result may be to increase the efficiency of supply and make consumers better off. Conversely, if firms selling at a single price find it

more profitable to “duplicate” products of their rivals than to offer more differentiated products, then insufficient variety will be

offered, even without copying.
dence between the values listeners place on

copyrighted works and the costs of providing

them; the system should give incentives for

works for which consumers collectively would

be willing to cover the costs. He also notes that

copyright is not intended to subsidize works

that consumers would not financially support; if subsidization is socially desirable,

then means other than revenues from homecopying fees should be used.45 Brennan also

suggests that policy regarding home taping

should not be directed toward correcting any

general perceived flaws in copyright.@

ANALYZING THE ECONOMIC

EFFECTS OF HOME COPYING

The three economic analyses of home copying conducted for OTA all include a cost-benefit framework. Two of them, by Johnson and

Mannering, use the survey data to work

within this framework to provide some quantitative assessment of the effects of home

copying on stakeholders. Each of the three

looks at a different part of the home-copying

puzzle: Katz considers implications for the

profits of producers and distributors of originals; Johnson considers the determinants of

copying and purchasing originals; and Mannering uses consumers’ purchase/taping

choices to examine hypothetically the shortterm effects of a home-taping ban on producers’ revenues and consumers’ welfare. None of

the analyses gives the complete picture of the

economic effects of home copying; taken to

unambiguously good move by Government or

industry.

Home Copying and Its

Economic Effects

The contractor report by Michael Katz47 focuses on the theoretical effects of home copying on producers’ profits but does not estimate them. According to Katz, both the

market for recorded music and the market for

electronically recorded visual images fall into

the hardware-software paradigm –products

are interdependent, produced and sold for use

as components of hardware-software systems.

Simplifying somewhat, stakeholders in these

markets fall into five general classes, each affected differently by home copying:

. Consumers: Home copying has two

broad sets of effects on consumers, one

direct and one indirect. The direct effect–if the availability and prices of

hardware and software are freed, independent of copying-is to make more

choices available to consumers. Those

who copy benefit from this effect, those

who do not are unaffected. The indirect

effect recognizes that the collective actions of home copiers may affect the supply of hardware and software– contrary

to the assumption above. One possible

indirect effect, when copying serves toreduce the variety of available software

and increase prices, would be negative.48

The net effect on an individual consumer

45 Brennm, op. cit., footnote 18, pp. ~-l~.

413’3#’. Brennm, The &r& Washington University, letter to J. Winston, OTA, Apr. 24, 1989 (enclosure).

4Wlichae1 L. Katz, “Home Copying and Its Economic Effects: An Approach for Analyzing the Home Copying Survey, ” contractor

report prepared for the Oflke of Technology Assessment, Mar. 9, 1989 (Spring!leld, VA: National Technical Information Service,

October 1989).

48~other thwretic~]y ~ssib]e eff~ is ~sltive, when copying stimulates the SUpp]y of soil.ware (see section be]ow on demand

effects).
yp

in prices, the net effect on the home copier depends on the balance between this

loss and the gain from making copies.

Consumers who do not copy experience

the indirect effects and may be hurt

through the actions of others. If, however, the indirect effect is to cause more

and varied goods to be produced, then

consumers who do not copy also benefit.49

Software Producers: The economic effect

of home copying on producers depends

on whether home copying stimulates or

dampens the demand for originals.

Either case is theoretically possible. For

audio recordings, the industry could be

characterized by: 1) a creation stage in

which there are a large number of firms

producing similar, but not identical,

products, and 2) recording, manufacturing, and wholesale distribution stages

(typically performed by an integrated recording company) in which the number

of firms is small and firms are aware of

the mutual relationships of sales, production, investment, and advertising

plans. In the creation stage, the recording company in effect invests in a lottery

by channeling its resources to particular

songwriters and artists. In such a market, the effect of reduced demand is to

lower the expected returns from coming

up with a “winner” and thus, to lower the

expected return from entering the industry. Therefore, if home copying does

lower demand, then there are likely to be

g 

would be expected to earn a competitive

rate of return, with or without home

copying. Because of the structure of the

recording, manufacturing, and wholesale distribution stages the effect of

copying on them can be extremely complex, but lower demand is likely to decrease profits.50

Retail Software Distributors: The effects

of home copying are somewhat similar to

those discussed for the software producers’ creation stage (above). If copying

stimulates the demand for originals and

entry is easy, there should be more retail

distributors and higher employment in

this sector; if it depresses demand, then

there should be fewer distributors and

lower employment.51

Retail distributors’ interests diverge

from those of software producers in

some important ways. First, distributors

may profit from being able to sell originals used to make copies, even if total

sales of originals are reduced (e.g., if the

distributor rents videocassettes or

broadcasts album sides). Second, if some

distributors are paid by manufacturers

on a unit volume (rather than dollar volume) basis, their interests may diverge:

if copying results in fewer originals being

sold at higher prices, manufacturers

may not be significantly harmed, but distributors would be if their profits were

based on unit sales, rather than dollar

volume.

4%ee Katz (1989), op. cit., footnote 47, p. 2.

s%fitz (1989), op. cit., footnote 47, PP. ‘2-4.

slfitz~ ~]a~~ification of I~re~] distributors’) inc]udes sever~ ~oups who pro~de the product to the final consumer – e.g., retail

record stores, video rental stores, radio stations, etc.
the same for these groups, which are

treated together here. The direct effect is

that the greater availability of software

(via copying) will make the hardwaresoftware system, hence the hardware,

more valuable. If indirect effects on the

supply of software (see above) are positive, hardware producers and distributors will also gain. If, however, indirect

effects on software supply lead to a reduction in the supply of originals, the

value of the systems and its hardware

will be adversely affected. Similar considerations arise when copying increases

the price of software. This reduces consumers’ willingness to pay for hardware

since the two system components are

used jointly.52

Analyzing Possible Effects53

According to Katz, estimating the relative

strengths of the effects of home copying on the

above stakeholders reduces to answering two

fundamental questions:

1. What are the lost profits of producers

and distributors?

2. How is the supply of software affected?

The first question cannot be answered fully

without extensive proprietary data from individual firms for a number of years. These

would be needed to model competition in pro

pg(p

its).54 The difference between software producers’ profits with and without home

copying depends critically on the nature of

competition in the industry, and how the

prices and quantities produced respond to

changes in the demand for originals; the latter

is a question that producers themselves can

best answer.

Katz notes that producers’ cost data are

needed to estimate the effects of copying on

producers’ profits, rather than revenues. The

relevant cost is the total marginal cost— the

extra cost of producing an additional unit – of

the record, tape, or CD, including all levels in

the production/distribution chain. Without

these data, and price data, Katz concludes

that there is little that can be said about the

magnitude of the economic harm to producers, except for loose bounds (like foregone

revenues under some pricing assumption, as

in Mannering’s analysis).55 Katz notes that the

number of copies made is “almost certainly”

an upper bound on the decline in the demand

for originals at a given price, but that using

this quantity to estimate foregone revenue

can yield a “very loose” upper bound on

harm. 56

For the second question – how the supply of

software is affected, one would need to play

out various scenarios based on the effects of

copying on producers’ profits.

5ZC&X fitz (1989), op. cit., footnote 47, P. 4-5.

M% Katz ( 1989), op. cit., footnote 47, pp. 5-7.

54Johnson ~d M~nering use sirnp]iffing assumptions to deal with these questions.

55The ~di=w=s with this pint, Conslderingthat the revenue effect is the ~ient one. (H. ~sen, Recording Industry Association of America, Inc., letter to OTA, May 2, 1989, enclosure with comments on drtdl chapter 8, p. 1.)

se% ntz (1989), op. cit., footnote 47, pp. 5-7.

In their analyses, Johnson and Manneringmake simplifying assumptions to partially circumvent this dilemma. As tables 11 and 12

in this chapter show, different assumptions about the substitution of copies for originals yield a very broad range of revenue effects.
Katz discusses households’ decision processes and consumers’ tastes as determinants

of the extent of copying, while taking into account the monetary costs of copying, as well as

the time required to make copies or obtain

originals, and the perceived quality of copies

relative to originals.

Katz notes that, because copies cannot always be substituted for originals and because

originals are needed to generate copies, copying has a very complex effect on the demand

for originals: when copying is feasible, originals are worth more because they can be used

to generate copies. Moreover, even if copies

could always be substituted for originals, an

increase in the availability of copies might

stimulate the demand for originals. This

would be counteracted by effects that would

suppress demand, including demand for multiple units of an original.58

Katz concludes that, taken together, these

effects produce a “twist” in the demand for

originals: consumers’ willingness to pay for

early units of an original rises (the original can

be used as a source of copies), but demand for

later units falls (copies serve as substitutes for

originals). This twist is what makes it so difficult to assess the effect of the change in demand on producers’ profits— different assumptions about market structure and

demand yield disparate results, depending in

part on the producers’ ability to influence

nals, the producers ability to appropriate the

consumer’s full value of originals, and the producers’ ability to charge different prices to different classes of consumers (e.g., by discounting multiple purchases or bundling formats

like CD/cassette).59

Katz also notes that – in theory, at least –

copies and originals could be used jointly,

rather than as substitutes. If so, then lower

costs of copying might be expected to stimulate sales of originals somewhat, by enhancing

consumers’ expected benefits from purchasing originals. One benefit might be the freesample effect: a copy might be a low-risk way

to try a new piece of software, and considerations like ethics, the desire to get liner notes,

or a desire for higher quality might then induce the consumer to buy an original. Also,

copies might provide software in an otherwise

unavailable form: consumers could make customized or selection tapes, could time-shift

broadcast material, or could copy the material from one format to another to place-shift.

Copying might stimulate consumer purchases of hardware, which in turn would increase the demand for original software,

which would lead to additional sales. Finally,

copies might generate benefits relating to the

fact that consumers value a hardware/software system more, the more popular that system and compatible ones are. Economists

refer to these benefits as “network externalities." 60

57* fitz ( l~sg), op. cit., footnote 47, PP. 7-17

~fitz f lg~g~, op. cit., footnote 47, P. 9“

5% ~tz ( 19B9), op. cit., fmtnote 47, pp. 9-lb, for switic examp]es of how profits With home copfing Cm ~ higher or lower th~

those without, ciepending on the assumptions about the marginal costs of copying and producing originals and the firm’s choice of

pricing strategies.

60A larwr ,I=r ~se can increase the ~mount of in formation avallab]e abut the system, m~e free samples more available, enhance

the image of a popular product, etc. See Katz ( 1989), op. cit., footnote 47, pp. 15-17, for more discussion.
The contractor paper by William Johnson61

is concerned with the effects of home copying

on the market for originals, from a positive,

rather than normative, perspective. Therefore, Johnson examines the effects of copying

on sales of originals, but does not examine

whether restrictions on home copying are

warranted. Johnson develops a theoretical

framework to estimate the effects of private

copying and uses data from the audio portion

of the survey done for OTA to estimate some

of the determinants of home audiotaping and

of purchasing original recordings. His results

provide some support for the notion that an

individual’s choice between copying and buying originals is affected by the value of his

time – higher values of time raise the number

of purchases of originals and reduce the extent of copying. Although Johnson attempted

to use these estimates to assess the effect of

copying on the purchase of originals, he concluded that the precision of his estimates did

not permit him to approximate the extent to

which copies were substituted for originals.

A Simple Model of Private Copying62

Johnson bases his model on an individual’s

cost-benefit trade-off for buying versus copying a particular work. He assumes that copies

and originals are equivalent in use, that both

purchasing and copying of the same work

takes place, and that most individuals engage

in some copying and some purchasing. The

form of either an original or a copy) depends

on particular attributes of the work and on attributes of the consumer that are observable

(e.g., age) and unobservable (e.g., tastes). The

consumer’s cost of obtaining a copy of that

work depends on a factor that is related to the

particular work and copy, on his value of time,

and on unobservable factors that are specific

to him but, in general, constant across all

works.

In this model, a consumer will buy an original of a particular work if his valuation of the

work exceeds its price and buying is cheaper

than copying for him. On the other hand, if his

valuation exceeds the cost of copying the work

and the sale price exceeds the copying cost, he

will copy rather than buy.63 Therefore, the

producer/seller of a particular work faces demand that will clearly decrease as the price of

the work rises-consumers will buy fewer originals, make more copies, and use originals less

intensively in copying.

A more interesting question is what the

model predicts about the demand for originals if the cost of copying shifts. If the cost of

copying drops for all consumers, there may be

little effect on the demand for originals when

their prices are low. For “moderate” prices of

originals, the effect may be substantial, with

many consumers substituting the cheaper

copies for originals. At high prices for originals, the model suggests that the effect of

cheaper copies may be to raise the demand for

originals, primarily for their use as a source of

copies.

elwi]]im R. Johnson, “Estimating the Effect of Copying on the Demand for Original Creative Works, ” Contractor report Prewed

for the Office of Technology Assessment, Mar. 3, 1989 (Sprintileld, VA: National Technical Information service, Odober 1989).

e- Johnson ( 19s9), op. cit., footnote 61, PP. 2-9.

M~mem&r that the ~op~ngcost includes time costs ~d di~~]ty of access to origin~s. In this retie], getting the work at the least

cost – i.e., saving money – is the decision criterion because copies and originals are assumed to be perfect substitutes.

In Johnson’s model, some consumers buy, others copy, others do neither. In a given population, the number who copy will depend on

the distribution of the components of consumers’ costs and valuations. There maybe additional demand for originals as sources of

copies, but this will decline as prices rise and consumers economize in the use of originals. Moreover, an extra copy will tend to create a

demand for less than one additional original.
ygpg

buy either more or fewer originals than they

would have bought were copying possible. In

the face of consumers’ responses to a copying

ban, producers might raise or lower their

prices for originals. Determining the difference between producers’ sales and revenues in

copying versus no-copying scenarios to measure their losses due to copying requires considering these two effects. The first effect can

be predicted from the response of demand for

originals to the cost of copying. This allows estimation of the net (positive and negative) effect of copying on the demand for originals

when price is held constant. Because the price

effect is not included, this will understate

losses due to copying. Omitting the second effect always leads to understating the loss (or

overstating the gain) copying causes to producers of originals.

Data Analysis and Estimation

Johnson uses data from observations of

copying and purchases taken at one point in

time to measure differences in individuals’

copying costs. The simple model, described

above, is extended from individual decisions

about a single work to consider a large number of differentiated works. Johnson specifies

an individual’s expected demand for purchases and for copies as functions of the

ranges of prices of original works, of his costs

of copying, and of his valuation of works, as

well as of observable and unobservable personal attributes.

Johnson focuses on the audio portion of the

survey data, particularly the sections on pur

Purchase and Ownership-Johnson calculated daily purchase frequencies from responses to the “most recent purchase)) sequence of questions (survey questions 30-37).

The average frequency for the whole population seemed too high, however: at 0.039 per

day, it would imply a yearly purchase frequency of 14 sound recordings per year. Industry shipments data seem to correspond to

a much lower rate — perhaps 3.5 or 4 sound recordings per year per person over the age of

10.64 Johnson notes that the frequency estimation is extremely sensitive to the few observations of very recent purchases, so ‘(telescoping,” or reporting a more recent purchase

than was the case, may have caused a large upward bias; this could also have occurred for estimates of copying frequency.65

Johnson has two ways of addressing this

problem. First, he uses alternative measures

of purchase and copying behavior, such as the

stock of recordings and the number purchased in the last month. Second, since a similar effect seems to occur for his copying

estimates, he assumes that estimates of substitution between copying and purchases

would be unaffected by equal proportional biases in copying and purchasing behaviors.

To at least partially mitigate telescoping,

Johnson constructed a second variable representing the number of purchases last month;

the mean value (0.59) implies an annual purchase rate of about 7, which is smaller than

the daily frequency implies but still larger

than national sales figures. The survey data

on stocks of recordings do seem in accord with

past sales figures, however. For example,

Johnson finds that the per-person stock of

CDs (3.8) is the same order of magnitude as

64A Johnson, Op. cit, footnote 61, pp. 9-10. He uses 1986 RL&4 shipments data, based on ZOO million peop]e, aged 10 or older in 19~.

~sThe method US.ed by OTA in ch. 6 to estimate overall copying and purchasing is less sensitive to these effects. Aggregating Purchasing or copying into categories like “past week” or “past month” reduces sensitivity to individual data points and to telescoping,

there the estimates based on the “last time” and “stock change in last month” are in closer agreement.
p

21 prerecorded cassettes.66

Copying and Stocks of Copies–Johnson

also calculated daily taping frequencies from

responses to the (most recent) broadcast taping and prerecorded taping sections of the

questionnaire. 67 As before, the estimates of

taping frequencies seemed excessively high –

the mean daily rate of broadcast taping was

0.023 and the mean daily rate of taping from

prerecorded material was 0.036. This would

yield a combined rate of 0.059 per day, or 21.5

per year — roughly 50 percent higher than the

estimated purchase rate of sound recordings.

Johnson notes, however, that these estimates

from self-reported data are not compatible

with industry sales figures for blank tape, and

seem to be as inflated as the estimates of selfreported purchase frequency.68

Johnson’s estimate of the average number

of tapes made in the last month is about 0.58,

for an annual average of 7. As was the case

with purchase behavior, these data imply

lower rates than the frequency data, but still

higher than aggregate sales would indicate.

Johnson finds that the estimate of the average

stock of home copies (from responses to question 29) is 13.8 tapes per person, which is of

the same rough magnitude as past accumulated blank-audiocassette sales.69 Of these

copied tapes, most (an estimated 10.7) were

q,

and about two-thirds the size of the stock of

prerecorded cassettes. Given the rate of copying and the size of the stock of copied tapes, it

is somewhat surprising that in the “last-listening” section of the survey, only one-tenth

of the respondents reported that they were listening to a copied tape. Johnson speculates

that this finding might indicate that people

copy music they are less interested in — and

perhaps less likely to buy– which would be

consistent with the survey finding that copied

tapes (especially those made from records or

other tapes) are regarded as being of somewhat lower quality than prerecorded cassettes.70

Time Spent Making a Copy– Items in survey question 45 ask about the time devoted to

making the last home tape, and the amount (if

any) the copier would have been willing to pay

someone else to make that tape. Johnson

found that the mean copying time was slightly

more than 2 hours; he considers this an upper

bound to the time cost because all of this time

need not have been lost to other activities. The

question on willingness to pay for a copy was

only answered by 66 individuals who said they

would consider paying someone else to make

the tape for them, so that the results, which

show an average willingness to pay of $6.63,71

may be unreliable.

6t3Johnmn ( lg8g), op. cit., fOOtnOte 61) p

 10”

WA copy of the questionnaire is in appendix B (see questions 43 ~d 44).

68The Internation~ TaP~iW As~iation rePfis~es of some 387.5 mi]]ion b]~k audiwassettes in 1987, or about 2 per person

over the age of 10. Since the survey data indicated that about 80 percent of copies are made using blank tapes, Johnson infers that the

average copying frequency should be around 2.5 per year.

6sA~ut 11 b]mk tips have ~n So]d ~r ~rmn since 1980 (John~n ( 1989), op. cit., footnote 61, p. 11). Remember that a “tipe” is

not necessarily equivalent to an “album. ”

70Johnson ( lg89), op. cit., footnote 61, pp. 11-12. See ch. 6 of this report for st~k da~.

TIAt ~ averaw ~a% of $lo~our, this would imp]y that the true time cost of tiping was x~ of an hour. (Johnson ( 1989), Op. cit.,

footnote 61, p. 12)
Johnson concluded that the best variables

to use to depict current copying and purchasing behaviors are the frequency variables described above: despite their apparent inconsistency with aggregate industry data, if the

degree of bias is the same for everyone, then

estimates of the determinants of that frequency at one point in time will be unbiased,

except for a proportionality factor.72

Dependent and Independent Variables–

Johnson’s specification has demands for copies and originals depending on income, relative prices, and demographic variables (used

as surrogates for tastes).73 Income effects are

captured by household income and demographic variables. Relative prices are more

difficult to capture. Because the price of originals does not vary significantly in the crosssection at one point in time (as opposed to

time-series data over several years), the price

effects must focus on copying costs. For these,

several measures are possible: the amount of

time reportedly taken up to make the copy;

the willingness to pay someone else to make

the copy; and proxies for the value of time, in

more in keeping with the predictions of his

model than the other two measures, which

were plagued by smaller numbers of responses. Table 7-1 presents all the variables

used in the analysis, with descriptive statistics

and sample sizes.

Results of Estimation – Johnson estimated74 measures of purchasing and copying,

with employment status as proxy for the cost

of copying.75 Tables 7-2 and 7-3 show the results using three measures of original purchases (daily frequency, purchases last

month, and stock of prerecorded cassettes)

and employment status to capture the cost of

copying. Tables 7-4 and 7-5 show estimation

results for the three measures of copying behavior (daily frequency, taping last month,

stock of copied tapes.

These coefficients in tables 7-2 through 7-5

show the sensitivity of the dependent variables (daily frequency, etc.) to each of the independent variables (employment status,

etc.) when controlling for variations in the

others. 76 For example, employment status

and gender (male) both have similar positive

Tp~thou@ the Varlab]es representing purchases or copies made in the last month seem to have the virtue of reducing the teleXoPing problem, these variables are less reliable than the freyuency ones. It is less desirable to use the stock variables because they are

much more influenced by past, rather than current, behavior (e. g., stocks of LP records do not reflect current LP purchase rates).

(Johnson (1989), op. cit., footnote 61, pp. 12-13.)

TaBut dir~t estimation of the substitution between copies and originals is not possible because the demand for copies is not independent of the demand for originals. Johnson finds that copying is positively related to original demand in the sense that those who

copy more also buy more originals. (Johnson (1989), op. cit., footnote 61, p. 13. )

T4Thr~s~ge ]east s~~es ~d Tobit estimators were used. The system of equations estimated were appropriate @rings of purchase and copying variables (e.g., purchase frequency with copying frequency, etc.). For more information on these techniques, see

Takeshi Amemiya, Advanced Econometrics (Cambridge, MA: Harvard U. Press, 1985).

75John~n ~W tri~ Usingthe other two measures for the cost of copying to help explain purchasindmpying fre~encies, but the.=

estimates were less successful. For purchasing frequency, none of the estimated coe~cients was statistically significant. For taping

frequency, only one coefficient in each of the estimations (the age coefllcient in the one using copy time, and the gender coefficient in

the one using willingness to pay) was significant. Johnson notes that, in part, the unsatisfactory results for the alternative measures of

copy cost may be due to the smaller numbers of respondents for the time-to-copy and willingness-to-pay questions. Also, variations in

copy time may reflect variations in the quality of the copy, rather than in the true cost of acquiring it. See Johnson (1989), op. cit.,

footnote 61, p. 16.

7SThe fiwres in ~enthe=s we the Cmfflcients’ t+.~tistics+ ~Pnding on the num~r of coefficients being estimated ~d the

number of observations, an absolute value oft near 2 (or more) generally indicates that the estimated coefficient values are statistically significant. Note that many of the coefficients are not statistically significant – i.e., the hypothesis that their true value is zero

cannot be rejected at the 95 percent confidence level. The sign of a coefficient indicates whether its effect is to increase or decrease the

likelihood of purchasing an original, the stock of originals, etc.
p

() 

Daily purchase

frequency

Daily rate of

purchasing recordings

0.039 (0.421)

0.059 (.0265)

20.69 (23.9)

10.99 (20.3)

0.059 (2.5)

1,433

1,140

1,366

1,376

1,501

Daily taping

frequency

Daily rate of taping

Original tape

stock

Number of prerecorded

cassettes owned

Stock of copied

tapes

Number of home-recorded

cassettes owned

Purchases last

month

Number of 45s, LPs, CDs

and prerecorded cassettes

bought last month

Taping last

month

Number of audiocassettes

taped last month

0.056 (2.5)

0.563 (0.496)

0.555 (0.497)

1,501

1,501

1,501

Employed = 1 if employed

O if not

High school = 1 if education

12 years or more but

not college graduate

= O if not

College = 1 if college graduate

O if not

0.192 (0.394)

0.155 (0.362)

0.480 (0.500)

39.2 (19.0)

33.3 (23.7)

663 (499)

133 (292)

1,501

1,501

1,501

1,491

1,120

66

393

Nonwhite = 1 if nonwhite

O if not

Male = 1 if male

O if not

Age

Income

Age in years

Annual household

income ($1000)

Copy willingness to pay

Copy time

Willingness to

pay for copy (cents)

Time to make last

copy (minutes)

SOURCE: Johnson, 1989

effects on the size of an individual’s stock of

originals (see table 7-2); being male has a statistically significant positive effect on daily

taping frequency; and age has a significant,

but smaller, negative effect (see table 7-5).

copying. The mathematical specification

Johnson uses would allow him to approximate the substitution of copies for purchases

of originals by the ratio of the coefficient on

employment in a purchasing-behavior equation and the same coefficient in a copying-behavior equation. But no statistically significant ratio can be constructed.77

The coefficient estimates in tables 7-2

through 7-5 were obtained by using employment status as proxy for the relative cost of

77% Johnson (1989), op. cit., fmtnote 61, pp. 8-10, 16-17. There are six such ratios. The numerators of four and the denominators of

the other two are not statistically significant, so one cannot conclude with confidence that they are significantly different from zero.
N = 895

Independent Daily purchase Purchases Original

variable frequency last month stock

(1) (2) (3)

Employed . . . . . . . . . . . . . . ., . . . . . -0,017

(.72)

-0.265

(.31)

4,47

(2.08)

797

(2.91)

High school ., ., . . . . . . . . . .

(1.106)

2,17

(1 .85)

College . . . . . . . . . . . . . 0055

(1.41)

2.24

(1.55)

6,60

(1.88)

Nonwhite . -0,031

(.98)

-0,684

(.61)

-426

(1.49)

(2.03)

-0.418

(7,72)

Male . . . . . . . . . ,. 0.030

(1 .38)

2.17

(2.79)

--0.179

(7,34)

Age ,. . -0.0056

(8.91)

0.137

(3 23)

Income . . . . . . . . . . . 0.002

(4.88)

0.012

(78)

NOTE: Sample restricted to persons 16 and older

SOURCE: Johnson, 1969

Table 7-3.–Three-Stage Least Squares Estimates of Original Purchases

(asymptotic absolute t-statistics in parentheses)

N=895

Independent Daily purchase Purchases Original

variable frequency Iast month stock

(1) (2) (3)

Employed . . . . . . . . . . . . . . . . . . . . . . . -0.0022

(0.14)

-0.201

(112)

322

(189)

574

(2.69)

4.33

(1.56)

3.64

(160)

0.187

(832)

High school . . . . . . . . . . -0,0013

(0067)

College . . . . . . . . . . . . . . . . . . . . -00021

(0.083)

-0.040

(0,138)

0.074

(0309)

Nonwhite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0,0022

(0104)

Male . . . . . . . . . . . . . . . . . . . . . . . . . . 0.022 0.514 3.64

(3,85) (2,97) (221)

Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0.0024 -0.022 -0227

(2.66) (5.11) (5.42)

Income . . . . . . . . . . . . . . . . . . . . . . . 0.0024 0,002 0.096

(3.85) (055) (280)

NOTE: Sample restricted to persons 16 and older

SOURCE: Johnson,1989
N=895

Independent Daily taping Taping Stock of

variable frequency last month copied tapes

(1) (2) (3)

Employed . . . -0.073 0.376 -0.943

(1 ,55) (0.33) (0.38)

High School . . . . . . . . . . . . . . . . . . 0.052 -1.17

(.86) (0.87) (1.52

College . . . . . . . . . . . . . . . . . . . 0,0012 -2.54 7.32

(0.015) (1 ,38) (1 .80)

Nonwhite . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1606 4,51 7.12

(2.84) (383) (2.22)

Male . . . . . . . . . . . . . . . . . . . . . . . 0.173 2.53

(3,96) (2.54) (2.69)

Age ., .......,,,,,..,,,,,,,, ,, . . . . . . -0.016 -0,285 -0.605

(11.5) (7.98) (9.44)

Income . . . . . ., ., . . . . . . . . . . . . 0.002 0.027 0.094

(2.42) (1.36) (1 91)

NOTE: Sample restricted to persons 16 and older

SOURCE: Johnson, 1969

Table 7-5.-Three-Stage Least Squares Estimates of Taping Behavior

(asymptotic absolute t-statistics in parentheses)

N=895

Independent Daily taping Taping Stock of

variable frequency Iast month copied tapes

(1)

Employed . . . . . . . . . . . . . -0.055

(261)

High School . . . . . . . . . . . 0.015

(059)

College . . . . . . -,024

(0,707)

Nonwhite .,, .,....... . . . 0.037

(1.32)

Male ,,,,,, . . . 0.059

(287)

Age . . . . . . . . . . . . . . -0.0025

(477)

Income . . . . . . . . ., . . . . . . . . . . . 0.0005

(1,17)

(2)

0.112

(0.60)

-0.492

(213)

-0.452

(1.50)

O 523

(2.12)

0.456

(2.56)

-0.026

(5.73)

0.0019

(0.526)

(3)

-1.14

(078)

3.43

(1.89)

4.92

(2,08)

4.56

(2.36)

4.45

(319)

-0.227

(6.36)

0,042

(142)

NOTE: Sample restricted to persons 16 and older

SOURCE: Johnson, 1969
substitution of copies for purchases of origi

nals. However, Johnson finds that they do

shed some light on the determinants of copying and purchasing behavior. In particular,

Johnson concludes that:78

●

●

●

Income raises the demand for both copies and purchases.79

The value of time affects both copying

and purchases of originals; a high value

of time induces consumers to copy less

and buy more.80

Controlling for other variables, copying

is more prevalent among the young, nonwhites, and males. Copying is more concentrated among the young than is purchasing.81

Consumer Welfare and Audio

Home-Copying Restrictions

The contractor report by Fred Mannering82

estimates econometric models of consumers’

purchase/taping choices and uses them as a

copying ban.

Mannerings report provides a

framework for a cost-benefit analysis of such a

ban. His detailed analysis of the economic

consequences of such a ban leads him to conclude that, at least for the short term, the

ban’s costs to the public outweigh its benefits

to the recording industry, its workers, and artists.

While the scenario of a ban on home

audiotaping might seem unrealistic, it can be

used to explore possible differences between

the levels of industry revenues, consumer welfare, and net social welfare in the present environment (with home audiotaping) and in a hypothetical world without taping. That is, it

provides a means for estimating hypothetical

short-term changes in recording-industry revenues absent home taping, under various assumptions about the extent to which taping

displaces sales of recordings.84 The primary

contribution of Mannering’s analysis is that it

focuses attention on consumers’ valuation of

homemade tapes and thereby, for the short

term, on the hypothetical decrease in consumers’ economic welfare, absent taping.85

m~w Johnmn ( 19~9), op. cit., footnote 61, pp. 15-16 ~d 17”

7Whe income coefficients for daily freyuency and stock (but not last-month behaviors) are positive and statistically significant.

8Whe employment coefficient for daily taping frequency is negative and significant but employment does not raise daily purchase

frequency. The employment coefficient for stocks of originals is positive and significant; it is imprecisely estimated for stocks of copies. Therefore, it is difllcult to find a substitution of copies for originals in the daily frequency data, and the stock data do not allow a

definite conclusion concerning substitution.

al when other thin= me he]d consmt, males are more likely to copy and buy. When other things are held constant, bing nonwhite

raises the freyuency of copying and stock of copies; the effect on purchasing may be negative, hut the coefficients are imprecisely

estimated. Age exerts a very strong (and statistically significant) negative effect on all variables, with the effewts on taping being larger

than those on purchasing. The size of the reported stock declines rapidly vvith the individual’s age, particularly for copied tapes.

a2’’Consumer Welfare and Audio Home Taping: An Empirical Assessment,” Fred L. Mannering, contractor report prepared for the

Oflice of Technology Assessment, Feb. 13, 1989 (Springfield, VA: National Technical Information Service, October 1989).

BsFor exmple, this ‘(~” COU]d be the result of technological copy-prot~tion.

84 These c~cu]ations me Simi]m t. the method that Townsend & Greensp used for the ~ studies, except that they indicate

how different interpretations of the OTA survey data can support a range of values for the displacement rate, and produce a range of

hypothetical revenue changes, rather than a single value.

85 Mmnerinfs ~a]ysis is somewhat a mirror i maw of the recording industw’s an~yses: instead Of estimating hypothetical ]osses

to the recording industry due to home taping, he estimates the hypothetical gains to the industry and losses to consumers’ welfare if

taping were eliminated. The welfare loss to consumers is a monetary valuation of consumers’ loss in satisfaction, without any loss in

actual income, tier a taping ban, Neither the Townsend & Greenspan nor the HRRC analysis reported any estimates of consumers’

benefits from home taping.
grounds that consumers copying signifi

cantly reduces the recording industry’s revenues, jobs, and royalties. But Mannering notes

that many other factors must be considered in

assessing the true economic consequences of a

possible ban on home audio copying. Arguably, the most significant of these is that consumers will be less well off as a result of the

ban, since it would eliminate the choice of an

important audio format — home copies. To assess the magnitude of this loss, one would

have to answer the following question:

How much would consumers have to be compensated after the ban to have them as well

off, in terms of satisfaction, as they were before the ban?

Mannering’s study focuses on obtaining a

monetary measure of this hypothetical compensation by using data on consumers’

choices of listening formats from the “last-listening” section of the survey (questions 9-28).

In their comments on Mannering’s contractor report and on a draft version of this OTA

report, representatives of the recording industry objected vehemently to this basic approach and the assumptions of this type of

analysis. According to RIAA:

“...This analysis turns the home taping issue

on its head. It assumes without explanation or

documentation that consumers are or might

be entitled to some form of compensation

upon a ban of home taping. We object to the

notion that revenues associated with the enjoyment of copyrighted music are ‘up for

grabs’ and that they should be distributed

away from copyright holders in favor of home

By contrast, representatives of the consumer

electronics and blank-tape industries considered Mannering’s general approach the

proper one to take. They noted, however, that

because Mannering estimated hypothetical

lost recording-industry revenues (that HRRC

also considered to be overstated), he consequently understated society’s hypothetical

net loss from eliminating taping. According to

HRRC:

“The paper by Fred Mannering adds an important dimension to the evaluation of home

taping by focusing attention on the magnitude of welfare benefits to consumers of the

home audio tapes they make... [but]...[t]his

calculation understates dead weight loss. Only

the profits of the industry and rents paid to

copyright holders [not revenues] should be

netted against consumer welfare effects to calculate dead weight loss.”87

This difference in views reflects the continuing and fundamental disagreement among

stakeholders as to the legal status of home

audio copying. Those who interpret the ambiguous state of the current law to mean that

home taping is a violation of copyright quite

reasonably view it inappropriate to consider

lost “benefits” to which they contend consumers were never entitled. Those who interpret

the current law to mean that home taping

does not violate copyright will consider that

such benefits should properly be taken into

account in setting policy.

Disagreements of this sort underscore the

ambiguity of the current law. Given that ambiguity, OTA considers it reasonable to examine the effects of home copying– or a copying

~H. ~=n, W,]etter to J. Winston, OTA, May 2, 1989 (enclosure with comments on drti ch. 8, P. 4).

WGWJ, Shapiro, ~~.t S. &hw~Z, Steven R. Brenner, ~C, memo to OTA ~th ~mmentson economic issues, May 1, 1989, pp.

17-18.
section of this chapter will present Manner

ing’s calculations and other examples to illustrate the range of possible effects supported

by the survey data.

Analysis

Mannering’s empirical analysis focuses

solely on the consumer’s choice between purchasing an original format (record, cassette,

CD) and making a tape at home, on the basis

of the format the consumer last chose to listen

to.

The Audio Format Decision-Making Process88 — Mannering relates the effect of a hometaping ban on consumer welfare to each consumer’s decision-making process in choosing

among audio formats (records, prerecorded

cassettes, copied or “made-tapes,” or CDS).

This decision-making process ultimately determines the value that consumers place on

having the “made-tape” format as an available choice. The choice of a specific audio format is the last of three complex, interrelated,

and time-variant decision processes (see figure 7-1):

1. Musical type preferences–classical,

country and western, soul, heavy metal,

rock, etc. These preferences evolve from

cultural, social, and economic influences,

and play a key role in the choice of audio

equipment and in specific purchase/taping decisions since certain types of music

tend to benefit more from use of higherquality formats and audio equipment. In

turn, musical-type preferences are influenced by consumers’ existing stocks of

audio equipment.

2. Audio equipment choices –CD player,

car tape deck, stereo record player, etc.

Longer term

decisions

SOURCE: Mannering, 1989

3.

Aside from the effect of musical-type

preferences and socioeconomic, consumers’ expectations about the frequency and purpose of equipment use

are important factors in their choice of

audio equipment.

Purchase/taping choices – frequency (the

number of purchases and/or tapings

made in some time period) and specific

formats (records, prerecorded cassettes,

CDs, or made-tapes). This choice differs

from the other two, which are really

much longer-term decisions. The purchase/taping choice is short-term in

nature, and is the one audio-related decision that a taping ban would immediately and most significantly affect. Although the longer-term choices above

influence the purchase/taping choice,

other factors like format price, availability and use of substitute media (e.g., a car

radio instead of a car tape deck), con-

%3ee Mannering, op. cit., footnote 82, pp. 2-4.
choosing a CD in anticipation of frequent

play) also are significant.

General Study Approach and Limitations89 – To comprehensively model the interrelated long- and short-term choices detailed

above would require extensive panel data on

the behavior of the same cross-section of consumers over time.90 Absent such data, Mannering focuses only on the consumers’ shortterm decisions between purchasing or taping

audio recordings. He uses a carefully constructed, cross-sectional survey of audio-related behavior to develop and estimate models to assess how a copying ban would affect

social welfare. His necessary focus on consumers’ short-term decisions imposes some limitations on subsequent welfare computations.91

The first types of limitation are model limitations. Because the model does not explicitly

account for longer-term choices, Mannering

cannot assess the effects of an audio homecopying ban on consumers’ choices of audio

equipment and musical-type preferences.92

Furthermore, he cannot estimate the changes

in purchase prices of various formats that are

likely to occur after such a ban.93 Thus, his

model must assume that consumers’ musical

type preferences and audio equipment stocks,

as well as purchase prices, remain constant in

the face of a home-copying ban. The effect of

of recordings and audio equipment is not pre

dictable. Another modeling concern arises

from the interrelationship between the frequency of audio purchase/taping choices and

the specific formats chosen. This interrelationship results from the fact that the frequency is, in part, a function of the satisfaction the consumer derives from specific

purchase/taping format choices. Given this,

frequency and individual choices should be

modeled jointly, but this was not feasible.

Therefore, estimates of changes in welfare require assumptions as to how the frequency of

purchase/taping decisions will be affected by a

home-copying ban.94

The second types of limitations are survey

limitations related to the “most-recent-listening-experience” approach taken in the survey.

Consumers were asked to recall their most recent listening experience to determine the

musical selection/format they listened to at

that time, as well as the length of time they

had owned that specific item. This creates two

concerns. First, purchase/taping decisions

that occurred many years ago are problematic – consumers may have had different musical tastes and stocks of audio equipment. To

mitigate this, Mannering uses only purchase/

taping decisions made during the year preceding the survey. Second, the “most-recent” approach is likely to uncover past purchase/

taping decisions that resulted in format

s-Mmnering, op. cit., f~tnote 82, PP. 4-7

wIde~ly, these data ~ou]d cover a ~rl~ of yews to ensure proper specification of the interrelationships among choices; they would

be costly to collect.

91 M~e]ing the ]Onwr-term choices of muslc~-typ preferences ~d audio e~ipment rewires socioeconomic, taste, ~d audio inventory information at the time such decisions were made, which may have been a number of years ago.

92without the home~pingoption, consumers may adjust their audio e~ipment st~ks, md perhaps even their musical type preferences (e.g., toward discounted types, in an effort to hold their audio budgets constant).

93 Estimating such price shins Wou]d rewire a m~e] that inc]udes indust~ price behavior and consumer purchasing behavior to

predict equilibrium format prices afl.er the ban.

S@ne would ex~ that the ~Wou]d ]Ower the freWency because the taping alternative would be eliminated. Since at least some

additional purchases are likely to be made, however, the net frequency will approach pre-ban levels.
lated, some bias w-ill be introduced in estimating the purchase/taping choice model and the

subsequent changes in welfare.95

Survey Results-Of the 1,501 completed

survey interviews, 517 respondents provided

data that Mannering could use in his analysis

since they reported they had listened to recorded music they had acquired in the past

year. In table 7-6, Mannering summarizes the

statistics of these respondents, whom he divides into two groups – those having only record and tape audio equipment (400 respondents) and those having record, tape, and CD

equipment (117 respondents). This segmentation reflects significant observed differences

in purchase/taping behaviors.

Table 7-6 begins by presenting, for the last

listening experience, the percentage of respondents choosing each of four formats: LP,

prerecorded cassette, made-tape, and CD.

Mannering’s estimation results indicate that

prerecorded cassettes are the preferred format among non-CD owners, whereas CDs are

the preferred format among CD owners. For

non-CD owners, the made-tape option is the

least preferred; for CD owners, records and

made-tape options are least preferred.96 Comparing CD and non-CD owner format inventories (from survey question 29), Mannering

finds that, on average, CD owners have larger

dicated by the reported number of purchases

in the last month. This suggests that individuals choosing to own a CD tend to be more active audio consumers. The socioeconomic

comparison of the two groups offers few surprises: Mannering finds that CD owners tend

to be younger and are more likely to have fulltime employment and higher income than

their counterparts who do not own CDs.

Econometric Framework and Estimation

Results 97 –Assuming that respondents select

the purchase/taping format option that provides the most satisfaction, Mannering used a

multinominal logit choice model of individuals’ format choices.98 He specified the format

choice as a function of the format choice itself,

the price of the format, the consumer’s income, his existing format inventories, his

stock of existing audio equipment, and other

socioeconomic conditions (e.g., employment,

education, etc.).

Mannering’s estimated model fit the data

well. Tables 7-7 and 7-8 show the estimation

results for those who do not own a CD player

and those who do, respectively. Most were statistically significant, as indicated by the t-statistic. Furthermore, Mannering was able to

conclude that consumers viewed the

prerecorded cassette and made-tape options

as distinct.99

g5Th1~ typ of bias Cou]d & e]lminat~ ha standard econometric procedures for interrelated discrete/continuous choices. B~lt these

could not be used without a more extensive cross-sectional sample than this data set contains.

‘While “records” include LPs, EPs, and 45s, Mannering finds that LPs/EPs are the dominant choice among a majority of respondents. A relatively small number of people use 45s, but they tend to be relatively frequent purchasers with lar~ inventories.

97sW Mmnerlng, op. cit., footnote 82, PP. 9-15

~For a de~ripti~n of ]o@t m~e]s, SEW D. McFadden, “Econometric Models of Probabilistic Choice,“ in Structural Analysis of Di.~-

crete Data with Econometric Applications (Cambridge, MA: MIT Press, 1981); and K Train, Quaiitataue Choice Analysis: Theory,

Econometrics, and an Application to Automobile Demand (Cambridge, MA: MIT Press, 1986).

The method is somewhat analogous to a regression where the dependent variable– i.e., the format choice — is discrete, rather than

continuous. A particular advantige is that the model can be shown to be consistent with utility-maximizing behavior.

99Mannering us~ a sFification test ~evelo@ by Smd] ~(] Hsiao. See Mannering ( ]~sg), op. cit., footnote 82, p. 15; and K_ small

and C. Hsiao,“Multinomial Logit Specification Tests, ” International Economic Review, vol. 29, No. 3, 1985.
Non-CD CD

owners owners

Percent choosing LP format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.0 10.26

Percent choosing prerecorded . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0 28.21

tape format

Percent choosing made-tape format . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 10.26

Percent choosing CD format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 51.27

Annual household income (dollars) . . . . . . . . . . . . . . . . . . . . . . . . ........32,140 40,120

LP inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.2 60.5

Prerecorded tape inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1 34,4

Made-tape inventories . . . . . . . . . . . . . . . . . . 14.7 29.1

CD inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 27.6

Percent with car tape deck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.3 86,3

Percent white/nonwhite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85/15 87/13

percent male/female . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38/62 58/42

Age (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.6 30.5

Education (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 12.7

Percent with full-time employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 61

Number of LP, prerecorded tape, . . . . . . . . . . . . . . . . . . . . . . . . . . 0.21 1.57

and CD purchases in the Iast month

Number of household members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18 3.18

Percent indicating sound quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.5 58.1

is extremely important to listening

SOURCE: Mannering, 1989

For the non-CD group, Mannering found a

preference against made-tapes, relative to the

record format option; this could reflect the

time investment required for made-tapes.100

Format price, relative to household income,

had a highly significant negative effect on the

probability of selecting a format. The total inventory of all formats was found to have a significant positive effect on the made-tape format choice that may have reflected the fact

that active audioconsumers tend to have high

usage rates of the made-tape option. The car

tape deck indicator variable has the expected

sign (positive), with those consumers having a

car deck being more likely to select tape formats (prerecorded cassette or made-tape).101

Finally, the sound-quality indicator (from

survey question 14) demonstrates that those

consumers in the non-CD group who considered that sound quality was extremely important were less inclined to select the prerecorded cassette option. This tends to

support the popular notion that prerecorded

cassettes offer inferior sound quality when

compared with records or even made-tapes recorded from CDS on high-grade audiotape.

l~he ~on.CDwoup~~ ~]ight re]ative preference for prer~ord~ cassettes over r~ords was not st,atistic&d]y significant.

IOIIn addition, whites were more likely to se]ect @pe options.
(p)

Estimated

coefficient

Constant for prerecorded tape s

Constant for made-tape s

Format purchase price (i n

dollars) divided by annual

household income (in

thousands of dollars)

Total record and tape ., ., . . . .

inventory, defined for

made-tape option only

Car tape deck indicator .

defined for tape options

(1 if have car tape deck,

O otherwise)

Race indicator defined for ... . . . . . . . .

tape options (1 if

white, O otherwise)

Sound quality indicator . . . . . . . . .

variable defined for

prerecorded tape option

only (1 if sound quality

extremely important,

O otherwise)

0.366

(1.0297)

-2.92

(-5.638)

-2.327

(-3.471)

0.0059

(1.76)

0.7427

(2.59)

0.905

(2.80)

-0.449

- 1.724)

Number of observation . . . . . . . 400

Log-likelihood at zero -439.44

Log-likelihood at -272.37

convergence

SOURCE. Mannering, 1989

(p)

Estimated

coefficient

Constant for prerecorded tapes .

Constant for made-tapes . . ., . ,

Constant for compact discs . ,

Format purchase price . ,

(in dollars) divided by

annual household income

(in thousands of dollars)

Sound quality indicator . . . . .

variable defined for

prerecorded tape option only

(1 if sound quality extremely

important, O otherwise)

Race indicator defined ., . . . . .

for compact disc option

(1 if white, O otherwise)

Classical music indicato r

defined for compact disc

option only (1 if listen

to classical music, O otherwise)

Full-time employment . . . . . . . .

indicator defined for

made-tape option only

(1 if employed full time,

O otherwise)

13351

(3 28)

-1012

(-1 .37)

O 728

(1 .096)

1618

( 2.00)

-0582

(-1 37)

1211

(1 91)

(

1 166

(1 54)

Number of observations 117

Log-likelihood at zero . 162.20

Log-likelihood at convergence . . . 12929

This result is particularly interesting because

the explicit survey questions about the perceived quality of various formats (question

SOURCE. Mannering, 1989

15) and quality as a motivation for taping

(question 45j) did not yield this result for the

sample population as a whole.102

I oz~mem~r that Mmnerlng~S SUb~p]e of517 (out of a ~ssib]e 1,501) ~] had listened to recorded music they had acWired in

the \ast year.
terpretation to those for the nonCD group.

For this group, Mannering found on average a

preference for prerecorded cassettes to records. 103 As with the non-CD group (and, as

expected) the signs of the price/income variable and the (prerecorded cassette) soundquality variables were negative. Mannering

again found that race was a significant factor–perhaps as a proxy for other environmental/taste effects – with whites more likely

to choose the CD format, when other things

were held constant.

Mannering found that the classical music

indicator showed that individuals who had

chosen classical music (survey Q. 17) tended to

select the CD option, apparently to take advantage of the CD’s superior sound quality.

Finally, he found that the employment indicator suggested that individuals with full-time

employment have a preference for the madetape option.104

From these estimation results, Mannering

calculated how consumers’ choices of various

formats would respond to increases in prices

of the formats relative to annual income. He

player and in table 710 for those who do. All

the elasticities have absolute values of less

than 1;105 Mannering concludes that these low

elasticities most likely reflect the habitual use

of formats and the significance of the longerterm factors of musical-type preference and

audio-equipment stocks. Interestingly, the

absolute values of the choice-probability elasticities for both of the tape format options

(prerecorded cassette and made-tape) are

smaller than for the LP records and CD options. This means that the shift in preferences

away from one of the tape format choices

would be smaller than the analogous shift

away from the LP or CD option. 106

Consumer Welfare Effects of a Home Copying Ban107 –To determine the change in consumer welfare resulting from a ban on audio

home copying, Mannering uses “compensating variations"— measures of how much

money a consumer would have to be given after the ban, to be as well off in terms of satisfaction as before the ban.108 He weighted these

measures by consumers’ reported purchase/

taping frequencies.109 This calculation yielded

IOcEstimated Cmfflclents indicating preferences for CDs relative to records and against made-tipes relative to records were not

statistically significant.

1 ~The cw~clent was not statistically significant at the 95-percent level. Mannering speculates that it may reflect the practice of

custom taping for use in a car tape deck during the work commute.

IOsE]astlcity is defined as the ~rcenhw change in one variable with respect to a l-percent ch~ge in the other. For ex~ple, the

(non-CD) choice probability elasticity with respect to LP purchase price/household income (table ‘7-9) implies that a 1 percent rise in

the price/income ratio will give roughly a 0.6 percent decrease in consumers’ probability of choosing records in a purchase/taping

decision (for the CD group (table 7-10) the decrease would be about 0.4 percent).

loefifihermore, for CD Omers, the made.~pe choice was more Ine]astic th~ the prerecorded cassette choice. For non-CD owners,

the made-tape choice was the more elastic. This contrast may reflect CD owners’ option to make tapes from CDs.

107w Mannering, op. cit., footnote 82, pp. 18-23.

1 ~~mem~r that the ~considers that ~ause home ~ping infringes Copyright, no Cornpnsation is due. (H. ms.ell, ~, Op.

cit., footnote 86. )

lo- Mmnerlng, op. Cit., fmtnote 82, pp. 19.20. For details of the technique, see K- Small ~d H. ~sen, “Applied Welfare Economics with Discrete Choice Models,” Econometric, vol. 49, 1981.
(p)

Elasticity with

respect to: Elasticity

LP purchase price (in dollars) . . . -0,592

divided by annual household

income (in thousands of dollars)

Prerecorded tape purchase . , -0,214

price (in dollars) divided by

annual household income

(in thousands of dollars)

Made-tape purchase price . . . . . . . . . . -0.312

(in dollars) divided by

annual household income

(in thousands of dollars)

Total record and tape inventory, . . 0.346

defined for made-tape

option only

SOURCE Mannering, 1989

Table 7-10.–Choice-Probabiiity Elasticity

Estimates for individuals Having a CD Player in

Home or Car (t-statistics in parenthesis)

Elasticity with

respect to: Elasticity

LP purchase price (in dollars ) 0.385

divided by annual household

income (in thousands of dollars)

Prerecorded tape purchase . . . . . . . . -0.332

price (in dollars) divided by

annual household income

(in thousands of dollars)

Made-tape purchase price . . . . . . . . . . . . . . . -0.221

(in dollars) divided by

annual household income

(in thousands of dollars)

CD purchase price (in dollars) . . . . . . . . . . . . . . -0.416

divided by annual household

income (in thousands of

dollars)

SOURCE. Mannering, 1989

sult in a consumer-welfare loss of $1.62 for

each purchase/taping decision. This estimate

assumes that the total number of purchase/

taping decisions remains the same after the

made-tape option is eliminated, and that the

other options are unaffected by the ban.

This technique cannot account for the effects of long-term changes in musical-type

preference, equipment stock, purchase/taping

frequencies, or use of alternative media. Although the direction of the estimate bias induced by these effects is not clear, most of the

excluded effects are longer-term in nature.

This suggests that the compensating variation obtained under these assumptions will

be a reasonable portrayal of actual short-term

impacts– say, over the first year after the

ban.110

The average frequency-weighted probability

of selecting the made-tape option is 15.8 percent.111 This implies that the consumer values

each made-tape at $10.25 ($1.62/0.158) –a

reasonable value given the current prices of

records, prerecorded cassettes, and CDs, and

the unique characteristics of made-tapes (potentially superior sound quality, option to

combine songs by more than one artist, ability

to customize by selecting only desirable songs,

etc.). To understand the implications of this

value, consider the average consumer making

10 purchase/taping decisions. On the basis of

the 15.8 percent probability, this consumer

can be expected to make 1.58 made-tapes per

10 purchase/tapings. Using Mannering’s compensating-variation calculation indicates that

in the short term — for example, during the

first year after a taping ban– the consumer

would have to be paid $16.20 ($1.62X 10) to be

as well off as before the ban.

I I ~hiS technl{~e ~ou]~ ~]So ~ ~~ t. ~S~ t. ev~uate other ~]icies that might restrict, rather than eliminate home taping .

111 Note that this is higher than the “nweight~ ~rcen~e Chwsingthe made-~pe option as indicated in table 7-6. This reflects the

fact that the consumers in the sample with higher probabilities of choosing the made-tape option also have higher purchase/taping

frequencies.
Previous analyses have not presented estimates of the economic effects of home

audiotaping on consumers. Although the recording industry only considers lost revenues

to be relevant for policy,112 consumer effects

are important when considering society’s economic welfare. This section will evaluate three

types of hypothetical effects:

c

●

●

the change in recording-industry revenues (i.e., retail sales of albums or the

equivalent), absent home taping,

the change in revenues from blank-tape

sales, absent home taping,

the change in consumers’ economic welfare, absent home taping, based on Mannering’s estimates of the compensating

variation and consumers’ valuation of

homemade tapes.

Calculations will use 1987 price and sales volume figures, consistent with the time period

of Mannering’s estimates. The hypothetical

change in net economic welfare, absent home

taping, can be estimated by combining the industry-revenue and consumer-welfare effects.

This estimate will roughly approximate the

net effect, because changes in industry profits

and rents (i.e., recording and blank-tape industry profits and royalties to performing artists and copyright holders), rather than industry revenues, should be used. We are unable to

obtain industry data with which to estimate

price-cost margins, thus revenues are used.

For illustrative purposes, a “ballpark” range

for recording industry profits and rents will be

provided, based on the 40-percent figure that

cording-industry profits and rents.

The estimates in this section select a broad

range of plausible values for the industry and

consumer effects, but do not attempt to account for the fraction of music tapings that

are fair use or are done by amateur or professional musicians, composers, etc.

On the basis of the number of home tapes

assumed not to be made, we can use Mannering’s compensating variation and the $10.25

valuation of homemade tapes to estimate the

hypothetical short-term decrease in consumers’ economic welfare absent home music taping. On the basis of the assumed number of

tapes that would not be made and the assumed sales displacement and/or sales stimulation effects of taping, the hypothetical

short-term effects on recording-industry revenues can be estimated. Similarly, if blank

tapes were not purchased to make home

tapes, the hypothetical effects on blank-tape

revenues can be estimated.

The same starting point –i.e., the number

of blank tapes sold in a given year — can be

used to produce a broad range of estimates.

Calculations of this sort are necessarily inexact, since they rely on sequences of assumptions and approximations. Moreover, even the

premises used to approximate the industry

and consumer effects are subject to dispute.113

For a chosen framework, various approaches

to interpreting and using survey and industry

data are possible. Often, several alternatives

are equally plausible, and the choice is subjective. Thus, analysts can disagree as to the

“preferred” calculation.

1 lz~ a~ve. This pint was emphasimd in the RIAA comments on a drafl of this report.

113For e~p]e, depending on one’s pers~ive as to the legal status of home taping, one might prefer a net-eCOnOmic-welfme

framework, as opposed to a focus only on recording-industry revenue effects. As we have seen, RIAA favors the latter approach, while

HR.RC favors the former.
effects absent all home taping. Table 712 pre

sents estimates absent home taping from

prerecorded sources only. These examples

show broad ranges of values, but the end

points should not be interpreted as maximum

or minimum values.

The calculations in table 7-11 are based on a

range of conclusions about the hypothetical

effects of a ban on home taping that the same

set of survey data and other sources can be

“shown” to support. The starting point for

these is the number of blank tapes sold in

1987. The calculations are based on:

●

●

●

●

Mannering’s value for made-tapes,

estimated 1987 average retail prices of

$7.80 per album-equivalent and $2.45

per blank tape,

a 1983 Audits and Surveys finding that

84 percent of blank tapes are used to record music, and

the 1988 OTA survey finding that 79.6

percent of tapings use new blank tape.

The variations, a dozen examples in all, differ according to:

●

●

●

whether an attempt is made to correct

for business use of blank tapes,114

how much sales-displacing material is

assumed to be on each tape,115

how the OTA survey questions on displacement are interpreted and/or dis

. whether the ability to make home tapes

is assumed to stimulate some purchases

of prerecorded music.

The three variations categorized under (A)

in table 7-11 follow the calculations in Mannering’s contractor report, which considered

the effects of a ban on music taping from both

prerecorded and broadcast sources. Mannering used industry sales data from 1987 (the

last year that complete data were available at

the time of writing), along with some earlier

survey results to augment the OTA survey. 116

The sales data indicated that industry shipments of prerecorded formats reached an annual rate of 637 million album-equivalents in

1987, while roughly 388 million blank

audiocassettes were sold. Mannering concluded that if as the 1983 Audits and Surveys

results indicated, roughly 84 percent of blank

tapes are used to record music, then some 326

million blank tapes were used to record music

in 1987. Since the OTA survey data (question

43g) suggested that 79.6 percent of tapings

used nonblank (preused) tapes, Mannering

calculated that about 409.5 million blank and

nonblank tapes were used to make home music tapes. On the basis of the OTA survey data,

he also estimated that home tapes contained

an average of 1.63 album-equivalents of material (questions 44d-441).

From responses to survey questions 451 and

45n, Mannering determined that (for those respondents asked these questions), a net of

about 4 of every 10 albums taped would have

114Accord1ngto the ~C, some 10 ~rcent of consumer purchases of blank tapes are for business u*. Therefore, they argue, these

are presumably not used for music taping and blank-tape sales should be adjusted accordingly. (Gary J. Shapiro et al., op. cit., footnote

87, p. 26. )

11 SMmnering estimat~ that home tiPS contined on average 1.63 album equivalents. The HR.RC argues that consumers might

not purchase all the recorded material on a home tape, if taping were not possible. (Ibid., p. 22)

I I BAuditS and surveys! “Home Taping in America,” op. cit., footnote 11; A. Greenspan (Hearings on S. 1739), op. cit., footnote 9;

International Tape/Disc Association, “Report on 1987 Blank Audio Cassette Sales” (New York, NY: ITA 1988); Recording Industry

Association of America, “News R.eleaseofApr. 19, 19880n 19871 ndustry Shipments”; Warner Communications, Inc., ” 1981 Estimate

of Loss Due to Home Taping, ” op. cit., footnote 11.

20-900 - 89 - 6
P IIII
aape dusy

r # blank tapes assumed

not purchased for

music taping (1987)

(see idem d above) . . .

s 1987 average price

per blank tape . . . . . . . .

t. hypothetical revenue

change absent music

taping . . . . . . . . . . . . .

Consumer welfare

u # of home music tapes

not made (see item f

above) . . . . . . . .

v consumer valuation

(per tape) . . . . . . . . . . . .

w. hypothetical consumerwelfare change absent

music taping . . . . . . . .

x. Range of net economic

welfare change (based)

on industry revenues) .

NOTES:

326 M

$2.45

-$799 M

409.5 M

$10.25

-$4197 M

293 M

$2.45

-$718 M

368.5 M

$10.25

-$3777 M

43015 M – – – – – – – – – – – – – – – – – – – - TO – – – – – – – – – – – – – – – – – – -$4440 M

a From industry sales data, International Tape/Disc Assoaation (ITA), 1988

b According to the HRRC, about 10% of all consumer tape sales are for professional (not home) use

c From Audits & Surveys data, 1982

d d = axbxc

e From OTA survey data, 1988

f f – d/e

g The 163 figure comes from OTA survey data, 1986 The HRRC argues that consumers might not purchase

all the material on the made tape

h Various interpretations of OTA survey data, 1988 Mannering used the 38% and 21% figures, the HRRC

suggested an alternative discounting yielding 5.4%

i i = f x g x h

j Calculated by Mannering from RIAA Market Research Committee data, 1988

k k = iX j

I OTA survey does not yield a measure of this rate directly Forsake of illustration, a 2% rate IS assumed OTA

data indcates that for 14% of recent purchases, individual had heard selection from album or by the artist on

a home tape

SOURCE: Office of Technology Assessment, 1989

m Album-equivalent shipments from RIAA data, 1888

n n = I xm

o o = n x -$(7.80)

p p=k+ o

q Townsend& Greenspan (1985) suggested that 40% of gross revenues went to company profits and

royalty payments

r See (d)

s Calculated by Mannering from ITA data, 1988

t t = -(r x s)

u See (f)

v Estimated by Mannering, 1989

w w = (u x v)

x x=p+t+ w
Table 7-12.-Hypothetical Changes Absent Home Music Taping From Prerecorded Sources - Short Term Only

Recording industry

a total blank & nonblank

tapes used for home

music taping . . . . .

b. # of album-equivalents

per home tape . . . . . . .

c. % of music taping from

prerecorded sources

d.

e

f.

g.

h.

i.

j.

assumed sales

displacement rate . . . . .

# of displacing albumequivalents ... . . . .

hypothetical gross

recording-industry

displacement change

absent taping

(@ $7.60 ea) . . . . . . . . .

assumed sales

stimulation rate . . . . . . .

1967 shipments

(album-equivalents) . . .

# of lost sales

(album-euivalents) . . .

hypothetical recording

industry stimulative

change absent taping . .

k. hypothetical net

recording-industry

revenue change

absent taping . . . . . . .

i. 40% as hypothetical

net change in profits

and royalties . . . . . . .

E

409.5 M

1.63

57%

36% 21% 5.4%

154 M 80M 80M

$1131 M $624 M $ 156 M

o% o% o%

— — —

$1131 M $624 M $ 156 M

$452 M $ 250 M $ 62 M

F

409.5 M

1.0

57%

36% 21%

89M 49 M

$694 M $362 M

o% o%

— —

—

5.4%

13 M

$ 101 M

o%

-.

$694 M $362 M $ 101 M

$278 M $ 153 M $ 40 M

G

366.5 M

1.0

57%

36%

80M

$624 M

o%

—

—

—

21%

44M

$343 M

o%

—

—

5.4%

11 M

$ 86 M

o%

.

$624 M $343 M $ 66 M

$ 250 M $ 137 M $ 34 M

H

366.5 M

1.0

57%

36% 21% 5.4%

80M 44M 11 M

$624 M $343 M $ 66 M

2% 2% 2%

637 M 637 M 637 M

13 M 13 M 13 M

-$101 M -$101 M $101 M

$523 M $242 M -$ 15 M

$209 M $ 97 M -$ 6M

(Continued on next page)
Blank-tape Industry

m. # of blank tapes assumed

not purchased from

prerecorded sources

(57% of tapings)

n. 1967 average price

per blank tape . . . . . . . .

0. hypothetical revenue

change absent music

taping . . . . . . . . . . . . .

Consumer welfare

p. # of home tapes

from prerecorded

sources not made

q consumer valuation

(per tape) . . . . . . . . . . . .

r. hypothetical consumer

welfare change absent

music taping . . . . . . . .

s. Range of net economic

welfare change (baaed]

on industry revenues)

NOTES:

a See item f in table 7–11

b See Item g m table 7-11

c OTA survey data, 1988

d See item h m table 7-11

e e = ax b xcxd

186 M

$2.45

-$456 M

233 M

$10.25

-$2366 M

167 M

$2.45

-$409 M

210 M

$10.25

-$2152 M

– 

– – – – – – 

– 

– 

– 

– – – 

– 

– – 

– 

– To – – – – – – – – – – – – – – – – – – – -$2576 M

f f = ($7 SO) x e See item j in table 7-11

g See item I in table 7-11

h RIAA data, 1988

I I =g xh

I j = -($7.80) x i

SOURCE: Office of Technology Assessment, 1989

k k=f+ j

I See item q in table 7-11

m See item r in table 7-11, m = 326 M or 293 M times 57

n Calculated by Mannering from ITA data. 1988

o o = -(m x n)

p p = (057 x a)

q Estimated by Mannering, 1909

r r = -(p x q)

s s=k+o+ r
yes to Q.45i–indicating that they thought

they could have purchased a recording with

the same material, if they had wanted to – were

asked these “sales-displacement” questions.

For the entire population, after accounting for

perceptions about the availability of a

prerecorded version, a net of about 2 of every

10 albums taped would have been purchased

if home taping were not an option. Mannering

presented calculations using both values.118

Some reviewers have subsequently argued

that even the lower value greatly overstates

the displacement rate that could be most

plausibly inferred from the survey data.

Drawing on the market research practice of

halving the undiscounted “take rate” indicated by responses to questions like the two

above, these reviewers suggested that abetter

assumption would be a 5.4 percent sales displacement rate.119 The “true” rate can be very

confidently bounded by O and 40 percent. For

each set of variations in table 7-11, hypothetical revenue increases have been calculated using displacement rates of 38, 21, and 5.4 percent.

Since fewer blank tapes would presumably

be sold, absent home music taping, blanktape revenues would decrease. Table 7-11 calculates this hypothetical revenue loss using an

Short-term consumer-welfare losses (i.e., in

the first year) are based on the 409.5 million

blank and nonblank tapes that will no longer

be used for the made-tape option, valued at

$10.25 per foregone made-tape (see rows u-v

of table 7-11). These estimated consumer

losses exceed estimated industry revenue

gains from the ban and produce a net economic loss to society.121

For the calculations in variation (B) of table

7-11, each made-tape is assumed to contain

only one album-equivalent of material. In

variations (C) and (D), the base of blank-tape

sales is reduced by 10 percent to account for

business use of blank tapes, under the assumption that these are not used for music

taping. Also, variation (D) assumes that some

sales of recordings are stimulated by the ability to make home tapes from them. Because

the OTA survey does not allow this effect to be

measured directly, a nominal value of 2 percent was selected for illustrative purposes; actual values may be higher or lower.

Note that the twelve variations used as examples produce a very broad range — by over a

factor of30– of hypothetical recording-industry revenue changes absent home audiotaping. These variations do not, however, alter

1 I 7A net of’~ ~rcent of ti@~bums were reported as would-be purchases. Respondents indicated that nearly 5 of every 10 roped

albums are would-be purchases, but that one of these 5 would displace another purchase, leaving the net effect at nearly 4 out of 10.

This is roughly the same figure reported by Warner Communications in 1982 and used in the Townsend & Greenspan analyses.

1 laMmnering considered that the Upper bound is the more reasonable one, because prerecorded formats could reasonably act as a

substitute for a customized home tape, even if the material is not exactly the same (e.g., the custom tape might delete or add a single

song, compared with an album).

119$hapiro et ~., op. cit., footnote 87, PP. 25-27.

1 ~M~nering determined the unit. tape price from the 1984 figure ($2.24) as reported by GreensPan ~d aausted it to 1987 price

levels by assuming an annual tape price inflation rate of 3 percent.

1 zlTab]e 7.11 appro~ma~s this as the sum of recording- and blank-tape industry revenue chan~s~d the ch~~ in consumer

welfare. Strictly speaking, industry profits and rents, not revenues, should be used. Therefore, table 7-11 overstates the industry

effects.

To provide some perspective as to the magnitude of this loss, Mannering estimated that for net industry revenue gains (the sum of

changes in recording- and blank-tape revenues) to exactly balance consumer welfare losses, the average consumer would have to rWire only $2.88 (as opposed to $10.25) compensation to forego a made-tape choice, under the assumption of a 38-percent salesdisplacement ratio. For a 21-percent ratio, the consumer would have to value the made-tape at only $0.71, less than the price of a blank

tape.
y

more, blank-tape revenues decrease throughout.

Table 7-12 summarizes calculations similar

to those in table 7-11, except that it only considers music taping from prerecorded

sources. The OTA survey indicated that some

57 percent of home audiotapings are from

prerecorded sources (see ch. 6). In table 7-12,

although blank-tape revenues decrease

throughout, the losses are smaller because

fewer sales are lost. Consumers’ economic

welfare losses are smaller because only 57 percent of home tapes are not made; similarly,

the net economic loss to society is smaller

than in the examples in table 7-11.

Thus, although home taping may reduce

the recording industry’s revenues, a ban on

home audiotaping would be even more harmful to consumers, and would result in an outright loss of benefits to society, at least in the

ess cea, ad woud deped oow te e

cording industry’s profits were invested, how

additional revenues would affect creativity,

how recording companies chose to price their

products, what new technologies were developed, and how consumers’ tastes changed. In

the long term, the net effects on society’s economic welfare might be positive or negative.

Mannering’s analysis suggests that the social costs of a home-taping ban can be significant in the short term, but that the range of

possible effects is very broad. Moreover, the

long-term effects are ambiguous, depending

on responses by the recording industry and society’s valuation of any additional works that

are produced, absent home taping. The possible net effects (on industry and consumers)

must be given careful consideration in policy

formulation. It is potentially misleading to

base policy on an estimate of one of several

harms or benefits.

lzzEven iworingeff~s on blank-tape revenues, the loss to society from a ban would be in the $2-$3 billion r~ge ~depenciing On the

salesdisplacement rate used).
Appendixes
stages: 1) preliminary activities, including

contractor selection and focus group meetings, and 2) survey instrument development

and review.

PRELIMINARY ACTIVITIES

Contractor Selection

OTA retained the services of a professional

survey research firm, Schulman, Ronca &

Bucuvalas, Inc. (SRBI), to develop the survey

instrument and to administer the survey.

SRBI was selected as the survey contractor in

May 1988 from a field of 14 firms that submitted proposals for consideration.

SRBI’s responsibilities, as specified in the

contract, included developing and revising a

conceptual framework and conducting two focus-group meetings. Then SRBI was to develop the sampling plan and survey instrument in conjunction with OTA staff and

OTA’s survey working group. The survey instrument was expected to average 20 minutes

in length (that is, it would be much shorter for

respondents who did no taping or copying and

longer for respondents who had a number of

copying activities). After the survey instrument was completed, SRBI was to administer

it to a nationally representative sample of

1,500 persons of age 10 and over.

Focus Groups

SRBI held two focus-group meetings at the

beginning of the survey development process.

Focus groups are small discussion groups of

about 10 people randomly selected from a

population similar to the expected survey

population. The meetings are structured, in

that the discussion leader has a specific

They are, however, designed to encourage the

participants to speak freely on the topics and

to give their opinions, feelings, and impressions. The focus group meetings were especially useful in getting immediate feedback on

what people thought and how they talked

about home copying issues. The meetings

were also a preliminary test of respondents’

reactions to proposed questions. Focus

groups can help a surveyor identify additional

topics of interest or change words and phrases

that will be confusing to respondents.

According to previous studies, young people

are major purchasers of prerecorded audio

products and are very active in home taping.

For these reasons SRBI and OTA felt it essential that the perspectives of young people be

well represented in the focus-group discussions. Thus, while one focus group had all

adults (persons over 18 years of age), the other

had primarily young people (persons 15

through 22 years of age). In both groups,

nearly all of the participants owned at least

one tape player and had purchased a record,

prerecorded cassette tape, or compact disc

within the past 6 months. In addition, most of

the participants also had at least one videocassette recorder in their household, and about

half of them had access to a personal computer.

SURVEY DEVELOPMENT AND

REVIEW PROCESS

The survey instrument itself was developed

by SRBI and OTA staff with considerable input from outside advisors and reviewers. The

open process used to develop the survey of

home copying was based on public involvement techniques that are commonly used in

OTA studies.

211
y p, ,

served the role of general review of the study.

The panel included representatives of many of

the relevant stakeholder groups, as well as

technology experts and labor and consumer

representatives.

Instrumental to the development of the

survey was the survey working group. This

group included a number of survey experts.

Two members were familiar with earlier

audiotaping studies, while the rest were unaffiliated with any earlier work related to the

home-copying issue. In addition, there were

members who were specifically expert in consumer behavior issues. The survey working

group was designed to lend technical expertise

in the development of the sampling plan, survey instrument, and analysis.

In addition, there were approximately 20

other reviewers. These included independent

technical experts, representatives of stakeholder groups, as well as OTA contractors working on other aspects of the study. OTA staff

mailed draft material to these reviewers, who

returned comments in writing or by telephone. In addition, some reviewers attended

meetings of the advisory panel and survey

working group and contributed to the discussions.

Throughout this appendix, members of the

above three groups are collectively referred to

as ‘(reviewers” unless there is a particular reason to specify members of the advisory panel

and survey working group separately.

The reviewers gave invaluable comments

and advice as the survey instrument was developed. But the actual work of creating the

survey instrument was performed by the survey contractor, SRBI, in consultation with

OTA staff. Of course, OTA remains responsi

Major Points of Controversy Early

in the Review Process

OTA staff and the survey contractor discussed early ideas for the sampling plan and

conceptual framework of the survey at the initial meetings of both the advisory panel and

the survey working group. In addition, the

survey working group reviewed an early draft

of the survey instrument at its first meeting.

Three major points of controversy arose

during the initial meetings of the advisory

panel and the survey working group. These

had to do with the scope of the survey and the

sampling plan. OTA originally planned to ask

questions about audio, video, and computer

copying in the same survey. The survey population was intended to be a nationally representative sample of 1,500 persons of age 10

and over. Some members of the survey working group and advisory panel (representing

primarily the stakeholder groups on both

sides) argued forcefully that OTA should focus only on audiotaping. They argued that

audio, video, and computer copying were fundamentally different and could not be treated

in the same survey. Audiotaping, according to

their reasoning, was the problem currently of

interest to the Congress. They held that OTA

should conduct a detailed analysis of home

audiotaping that would attempt to resolve the

differences seen in previous studies. To this

end, these reviewers considered that OTA

should attempt to give a definitive answer to

such questions as:

●

●

How much audiotaping is done each

year?

How many sales of prerecorded, copyrighted material are displaced by home

taping? and
All reviewers agreed that OTA’s original

plan to include audio, video, and computer

copying was extremely ambitious and would

be difficult to accomplish in a single survey instrument. Most reviewers did, however, support OTA’s goal of keeping the survey focus as

broad as possible. Although audiotaping

should be the primary topic of the study, most

reviewers agreed that questions on videotaping and computer copying would help to form

a better context for policy analysis, and would

perhaps serve as a basis for future work. As it

turned out, at a later stage of the survey development process, the section on computer

copying had to be deleted because of questionnaire length.

In a related area of controversy, some reviewers suggested that the sample population

should be 1,500 audiotapes rather than 1,500

members of the general public, only some of

whom would be tapers. It would be possible,

with a sample of all tapers, to ask more detailed questions and to make finer distinctions, for example, between heavy tapers and

occasional tapers. These reviewers suggested

that such an approach would make it possible

for OTA to properly weight the responses and

to make more accurate estimates of the

amount of taping and the level of economic effects on the recording industry.

By the same token, some of the same reviewers objected to including opinion questions. They suggested that the OTA survey

should focus on questions about audiotaping

activity, and not include any questions about

attitudes toward taping or toward intellectual

g

a thorough study of audiotaping activity and a

thorough opinion poll as well.

Most reviewers supported OTA’s original

plan to interview the general public and to include opinion and attitude questions. They

felt, as did OTA staff, that only a study of the

general public could give a clear picture of the

extent of home taping and copying. Opinion

questions give the opportunity to see what relationships exist between taping activity and

attitudes toward intellectual property. Previous studies have not usually considered these

two topics together.

Further, it is useful to understand major

similarities and differences in attitude between tapers and other members of the public. If the attitudes of tapers and nontapers toward intellectual property are essentially

similar, Congress may wish to take a different

approach to new policy than it would if the attitudes are very different. In determining how

effective potential policy alternatives will be,

it is useful to gauge how acceptable they seem

to the population as a whole as compared with

their acceptability to a special interest group

(e.g., people who make home audiotapes).

The final area of controversy dealt with accuracy. Some reviewers suggested that OTA

would not be able to get accurate information

from a survey on taping and copying activity.

They suggested that some tapers, believing

their actions to be illegal or immoral, would

simply answer untruthfully. Other respondents would intend to answer truthfully, but

their answers would be inaccurate owing to

faulty recall and “telescoping.”2

1 Excerpted from: Robert S. Schwartz, McDermott, Will&Emory and member, survey workinggroup; Joseph Smith, Oxtoby-Smith;

Steven Brenner, Cornell, Pelcovits & Brenner, Consultants for Home Recording Rights Coalition; memorandum to OffIce of Technology Assessment, July 8, 1988, p. 4.

Telescoping refers to inaccuracy in remembering the time elapsed between events or the number of events in a time period. Often

events that occurred outside the reference period are recalled as occurring within the reference period.
ample, owing to faulty recall. The only way,

they said, to determine how many homemade

tapes a person has would be to count them

during an in-person interview. These reviewers were particularly worried that if OTA used

results of the survey to calculate economic

harms to industry, the calculation would be

inaccurate. A number of earlier studies have

estimated losses to industry by extrapolating

the number of hours of taped music (or the

number of taped songs) in home tape libraries

and multiplying that number by the price of

purchased recordings. If OTA used such an

approach, the results would be lower than actual, since people are most likely to underestimate the number of tapes in their libraries.

The problems of dishonesty, faulty recall,

and telescoping were recognized to be problems of all survey research. Few reviewers

thought that dishonesty would be a serious

problem. In the experience of SRBI and other

researchers, respondents are generally honest, even about sensitive issues, so long as the

questions are phrased in a nonjudgmental

way. The possibility of conflict between therespondents’ behavior and belief could be minimized by asking behavioral and attitude questions at different times. For example, the OTA

survey was designed to ask about taping behavior first; questions about beliefs and opinions, which might be considered somewhat

judgmental, were clustered at the end of the

survey.

Faulty recall and telescoping can be minimized but not eliminated. The way to minimize these problems is to concentrate on

questions about a specific event (e.g., the last

time the respondent purchased or used a certain object) or about a very recent time period

(e.g., events in the past week or past month).

The OTA survey focused on activities of the

past week or month, or on the most recent and

the next most recent experience of purchasing, listening, copying, etc. A few questions

year was considered a nonviewer and excused

from further questions in that section) and to

afford a general comparison with results from

some previous studies.

The problem of faulty recall remained, of

course. We could only expect that the answers

to such questions as “Approximately how

many audiotapes do you own?” would be only

the respondent’s best estimate, not absolute

truth. As is discussed in the chapter on economic analysis, OTA’s approach differed from

that of earlier estimates of industry losses.

For the purposes of this analysis, each respondent’s best estimate was adequate.

Comments on Later Stages of Review

Eleven more drafts of the survey instruments were created, and there were three additional rounds of review following the initial

meetings of the advisory panel and survey

working group. Reviewers were invited twice

more to comment on any aspect of the survey

instrument, including possible inclusion, deletion, or rewording of questions. In the last

round, immediately before the survey went

into the field, reviewers were invited to screen

the final survey questions for possible biases

in the wording only.

The review procedure for the survey working group was the most detailed. After reading

a draft of the survey, members submitted

written comments and then participated in a

l-hour (or sometimes, multi-hour) telephone

conference call to discuss their comments in

detail with OTA and SRBI staff. Several other

reviewers, including representatives of

stakeholder groups, also elected to submit detailed comments and to participate in conference calls. Other reviewers and advisory panel

members presented briefer comments in writing or by telephone.
and the Home Recording Rights Coalition

(HRRC), submitted sample questions that

they thought should be included in the survey

instrument. Some of these were very helpful

to OTA in developing its own survey. For example, the series of questions about the most

recent purchase of records, prerecorded cassettes and CDs was greatly improved by

adopting a modified version of questions developed by the HRRC and its consultants.3

Some suggested questions from stakeholders could not be used, however, either because they went into a level of detail that was

inappropriate for the OTA survey or because

they would have introduced or exacerbated a

bias in the survey. For example, HRRC and its

consultants also offered an extensive and well

These questions, designed to count every

occasion of such taping, would have been useful if OTA had been attempting to calculate,

for example, what percentage of audiotapes

are used nationwide for purposes other than

to tape copyrighted music. This had been

done in some previous surveys. This was not

OTA’s objective, however, and the detailed information, while interesting, would have been

inappropriate. The OTA survey includes a

simpler section on taping of noncopyrighted

material that is better balanced with the section on music taping and is more suitable for

this study.

Comments of all reviewers were very helpful in removing biased and leading questions

from the surveys.

s*, for e~p]e: R,Obert S. Schwartz, Joseph Smith, and Steven Brenner, personal communication, JUIY 18, 1988.

41bid.
Hello, I’ m from SRBI, the national statistical research organ -

ization in New York City . We are conducting a study for the Office of Technology

Assessment of the U.S. Congress on home audio and video technology. The study

will help to inform Congress about how the public uses home audio and video

technology and their attitudes about some policy alternatives in these areas .

Your answers will be treated as strictly confidential .

Let me begin by asking a few questions about home video technology.

l a . Do you currently have a videocassette recorder, a VCR, in your household?

Yes. . . . . . . . . . . . . . .1 SKIP TO Q. 2

No. . . . . . . . . . . . . . ..2

Refused/Not Sure. .3

lb. Have you owned, borrowed or rented a VCR at any time In the past month?

Yes. . . . . . . . . . . . . . .1 SKIP TO Q. 3

No. . . . . . . . . . . . . . . .2

Refused/Not Sure. .3

1c. Have you purchased a prerecorded videocassette, either for

yourself or someone else in the past year?

Yes. . . . . . . . .1 SKIP TO Q. 8b, PAGE 6

No. . . . . . . . ..2 SKIP TO Q. 9, PAGE 7

Not sure. . . . 3 SKIP TO Q. 9, PAGE 7

Refused. . . . .4 SKIP TO Q. 9, PAGE 7

2. How many working VCRs do you currently have in your household?

None. . . . . . . . . . .0

One. . . . . . . . . ...1

Two. . . . . . . . . . ..2

Three or more. .3

Refused. , . . . . . .4

IF UNDER 17 YEARS OLD, SKIP TO Q.

3. In the past month, on how many

Made a videotape with a home

9 (PAGE 7)

occasions have YOU (REA D

video camera, . .

Rented a videotape from a club or store. . . . .

Borrowed a videotape from a library. , . . . . . . .

Recorded a program from television. . . , . . . . . .

Copied a prerecorded videotape. . . . . . . . . . . . . .

Purchased a prerecorded videotape. . . . . . . . . . .

ITEM)?

None. . .00 Not sure. ..9 9

None. . .00 Not sure. ..9 9

None. . .00 Not sure. ..9 9

None. . .00 Not sure. ..9 9

None. . .00 Not sure. ..9 9

None. . .00 Not sure. ..9 9

217
None. . . . . . ..00 SKIP TO Q. 8a

Not sure. ...9 9

b. How many of these videotapes, if any, were purchased as prerecorded

videotapes?

NUMBER PRERECORDED TAPES

None. . . . . . 00

Not sure. .99

c . How many videotapes do you have (in the household), if any,

that were made with a home videocamera?

NUMBER OF VIDEOCAMERA TAPES

None. . . . . . . . 00

Not sure. . . .99

d. How many videotapes do you have (in the household), if any, tha t

contain programs recorded from television or copied from other tapes?

NUMBER OF HOMEMADE TAPES

None. . . . . . ..0 0

Not sure. . . .99

5 a . When was the most recent time that you made or acquired a videotape,

not including blank tapes?

Today. . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . . . . .1

Number of Weeks Ago. . . . . .2

Number of Months Ago. , , ..3 — — RECORD ON FLYSHEET

Number of Years Ago, . . . . .4 RECORD ON FLYSHEET . —

Not sure. . . . . . . . . . . .5
5C.

5d.

5e,

pyp, p

Prerecorded tape you purchased. . . .. ......1 SKIP TO 6a

Prerecorded tape purchased for YOU. ......2 SKIP TO 6 a

Program you recorded from TV. . . . . ........3

Tape you copied . . . . . . . . . . . . . . . . . . ........4 SKIP TO 6C

Tape made for you. . . . . . . . . . . . . . . . ........5 SKIP TO 6a

Videocamera tape (vol. ). . . . . . . . . . . . . . ....6 SKIP TO 6a

y

Never have acquired my own tape. . ........7 SKIP TO Q. 9, PAGE 7

Rented or borrowed (vol. ). . . . . . . . . . . . ....8 ERROR, REPEAT Q. 5a

Not sure. . . . . . . . . . . . . . . . . . . ........9 SKIP TO Q. 9, PAGE 7

What kind of program were you recording?

Did you make that tape to keep or to use only temporarily?

To keep. . . . . . . . . . . . .1

Use temporarily. . . . .2

Not sure. . . . . . . . .3

Did you use a new blank tape to make the recording or did

you tape over another recording?

New blank tape. ..... 1

Taped over. . . . . . . . . .2

Not sure. . . . . . .3

6a. Not counting recording s made from television or home videocameras, have

you ever copied a videotape (prerecorded or home recorded) either for

yourself or for someone else?

Yes. . . . . . . . . . . . . . .1

No. . . . . . . . . . . . . . ..2 SKIP TO Q. 8a

Not sure. . . . . 3 SKIP TO Q. 8a

6b. When was the most recent time that you copied a videotape,

either for yourself or someone else?

Today. . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . . ...1

Number of Weeks Ago. . . . . .2

Number of Months Ago. . . . .3 — — RECORD ON FLYSHEET

Number of Years Ago. . . . ..4 — — RECORD ON FLYSHEET

Not sure. . . . . . . . . . . .5
6d .

6 e .

6f .

6g .

Rented or purchased tape. . . . ........1

Tape you/someone else had made. .....2

Not sure. . . . . . . . . . . . . , . . . , . ....3

Refused. . . . . . . . . . . . . . . . . . . . . ...4

Where did you obtain the tape that you were copying?

Own original. . . . . . ........1

Family. . . . . . . . . . . . . . ......2

Friend/co-worker. . . . . . . . . .3

Public library. . . . . . . . . ...4

Video rental club/store. . . 5

Other (SPECIF Y)

..11

Not sure. , . . . . . . . . . . . . . . ..12

Did you make that tape to keep or to use only temporarily?

To keep. . . . . . . . . ....1

Use temporarily. . . . .2

Not sure. . . . . . .3

Did you use a new blank videotape to make the recording or did you

tape over another recording?

New blank. ...... 1

Taped over. ..... 2

Not sure. .... 3

Why did you copy it? Anything else?

6h. To the best of your knowledge, could you have purchased that on

prerecorded tape , if you had wanted?

Yes. . . ........1

No. , , . ........ 2

Not sure. . .3
8 a .

None. . . . . . ..0 SKIP TO Q. 8a

Not sure. . .99

7b. How often, if ever, do you borrow videotapes from persons outside

of your household in order to copy them? Would you say at

.— —

least weekly , at least monthly , a few times a year, rarely or never?

At least weekly. . . . . . .1

At least monthly. . . . , .2

Few times a year. . . . . .3

Rarely. . . . . . . . . . . . , ...4

Never. . . . . . . . . . , , . . ...5

Not sure. . . . . . . . . . . . . .6

Have you ever purchased a prerecorded videocassette tape, either for

yourself or someone else?

Yes. . . . . . . . . . . . .1

No. . . . . . . . . . . . ..2 SKIP TO Q. 9, PAGE 7

Not sure. . . 3 SKIP TO Q. 9, PAGE 7

8b. When was the most recent time that you purchased

videotape , either for yourself or someone else?

IF ONE

Today. . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . . . . .1

Number of Weeks Ago. . . . . .2

Number of Months Ago. . . ..3 . —

Number of Years Ago, . . . . .4 . —

Not sure. . . . . . . . . . . . . .5

MONTH OR MORE IN Q. 8b, SKIP TO Q. 9

a prerecorded

8c. How many prerecorded videotapes did you purchase on

that occasion?

NUMBER

Not sure. ..9 9
y 

extremely important, quite important, slightly important, or no t

at all important ?

Extremely important. . . . . . . ........1

Quite important. . . . . . . . . . . ........2

Slightly important. . . . . . . . ........3

Not at all important . . . . . ........ 4

Not sure. . . . . . . . . . . . . . . . . . . . ..5

10. During the last seven days , approximately how much time did you spend

listening to music on the radio and television — — —. — ?

HOURS MINUTES

None. . . . . . . 0

Not sure. . .99

11. Not including music on radio and television, approximately how much time

in the last seven days did you spend listening to music on records — ,

audiotapes and CD s not including background music in public place s

(e.g. , stores , offices , elevators , bars) .

HOURS MINUTES

None. . . . . . . 0

Not sure. . . 9 9
Do

Have

a . Record player. . . . . . . . . . . . . . . . . . . . . . . 1

b. Cassette tape deck in

a home stereo system. . . . . . . . . . . . . . . . 2

c . Cassette tape dec k

in a car. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

d. Compact disk player . . . . . . . . . . . . . . . . . 4

e . Walkman-type portabl e

cassette player. . . . . . . . . . . . . . . . . , , . . 5

f. Portable radio/tape playe r

(Including boom box). . . . . . . . . . . . . . . . 6

g. None of the above. . . . . . . . . . . . . . . . . . 7

h. Refused. .,..,.... . . . . . . . . . . . . . . . . . . 8

i. Not sure . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IF MORE THAN ONE ITEM ‘HAVE" IN, Q. 12a ASK:

12b. Which of these audio systems or components do you

to listen to music on records, audiotapes or CDS?

IF ANY CASSETTE PLAYER REPORTED IN Q. 12a ASK:

MOST

USED

1

2

3

4

5

6

7 SKIP TO Q. 14

8 SKIP TO Q. 14

9

—use most frequentl — y

RECORD ABOVE.

72C. Do any of your cassette tape decks have two or more cassette drive s

(dual cassettes) ?

Yes.... .. ...... 1

No. . . . . . . . . . . . ..2 SKIP TO Q. 13

Not sure. . . . 3 SKIP TO Q. 13

12d. Do any of your cassette recorders have a high speed dubbing

or fast dubbing feature ?

Yes. . . . . , . . . . . . .1

No. . . . , . . . , . . . . ,2

Not sure. . .3
Very good. . . . . . . . . .2

Good. . . . . . . ........3

Fair. . . . . . . . . . . . . . .4

Poor. . . . . . . ........5

Not sure. . . . . .6

14. How important is It to you to get high quality sound when you listen to

music? Is It extremely Important, quite important, slightly Important ,

or not at all important ?

Extremely important. . . . . . . . . .1

Quite important. . . . . . . . . . . ...2

Slightly important. . . ........ 3

Not at all important .. ...... 4

Not sure. . . . . . . . . . . . . . . .5

15. Now, I’d like to get your opinion of the sound quality of different types o f

recorded music, based on your experience, what you’ve read or what you have

been told. Using a scale of 1 to 7 , where 1 means really poor sound qualit y

and 7 means really excellent sound quality , where would you rate the sound

quality of (READ ITEM)

ROTATE LIST

( )Compact disk s

( )LP records

( )45 record s

( )Pre-recorde d

( )Tapes copied

CDs

( )Tapes copied

LP records

( )Tapes copied

pre-recorded

cassette s

from

from

from

cassette s

POOR

SOUND

1 2

1 2

1 2

1 2

1 2

1 2

1 2

3

3

3

3

3

3

3

4

4

4

4

4

4

4

5

5

5

5

5

5

5

EXCELLENT

SOUND

6 7

6 7

6 7

6 7

6 7

6 7

6 7

NOT

SURE

8

8

8

8

8

8

8
Today, . . . . . . . . . . . . . . . . ..0

Number of Days Ago. . . ...1

Number of Weeks Ago. ....2 — —

Number of Months Ago. ...3 — —

Number of Years Ago. ....4 — —

Not sure. . . . . . . . . . . . . . . .5

IF 12 MONTHS OR MORE IN Q. 16, SKIP TO Q. 29

17. What kind of music were you listening to that time?

18. Where were you listening to it --- at home, in the car, at a friend’s ,

at work , at school or somewhere else?

Home. . . . . . . . . . . . ..1

Car. . . . . . . . . . . . . . .2

Friends. . . . . . . . . . .3

Work. . . . . . . . . . . . . .4

School. . . . . .. .....5

Other (SPEC IF Y )

. . 11

19. How many other persons, if any, were listening to the music with you?

PERSONS

None. . . . . . . 0

Not sure. . .99

20a, Were you listening to records , audiotapes or CDs? MULTIPLE RECORD IF NECESSARY

IF ONLY ONE FORMAT RECORDED IN Q. 20a, SKIP TO Q. 20c

20b. Which did you listen to last, on that occasion? SINGLE RECORD

20c . H OW many different (FORMAT IN Q. 20a/b) did you listen to that time ?

Q.20a Q.20b Q. 2 0 c

TYPES LAST NUMBER

LISTENED LISTENED LISTENED

Records. . . . . . . ..1 1

I Tapes. . . . . . . ....2 2 I RECORD ON FLYSHEET

CDs. , . . . . . . . . . . ,3 3

Not sure. . . . . . . .4 4 99
None. . . . . . . . . . . 0

Not sure. . . . ..99

22. Was the (record/tape/CD) yours or someone else’s?

(IF MORE T H AN O N E, USE LAST LISTENED )

Yours. . . . . . . . . . . . .1

Someone else’s. . . .2 SKIP TO 0.29

Don’t recall. . . . . .3

23. How long had you had that recording?

Less than a day. . . . . .0

Number of Days ...... 1

Number of Weeks . . . . .2 . —

Number of Months .... 3 — —

Number of Years ..... 4 — —

Not sure. . . . . . . ,5

24a. How did you obtain that (record/tape/CD) -- did you buy it, borrow it,

receive it as a gift , make it or something else?

Bought. . . . . . . . . . . . . . . . . . . . . . . . . ........1 SKIP TO Q.24d

Other household member bought (vol. ). ..2 SKIP TO 0.29

Borrowed. . . . . . . . . . . . . . . . . . . . . . .’. . . . ....3 RECORD ON FLYSHEET

Given. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....4 RECORD ON FLYSHEET

Made. . . . . . . . . . . . . . . . . . . . . . . . . . . ........5 SKIP TO Q.25

Other (SPECIFY)

. . . . . . . . . . . 11

IF AUDIOTAPE IN Q. 20a/b and BORROWED OR GIVEN IN Q.24a, ASK Q. 24b

ALL OTHERS SKIP TO Q.29

24b. Was that a prerecorded audio cassette that someone

had purchased or an audiotape that someone had made?

Prerecorded cassette purchased. . . . .1

Audiotape someone had made. . . . . . . . . .2

Not sure. . . . . . . . . . . . . . . . . . . . . . . . . . ..3

24c. Who or where did you get it from?

Household member. . . . . . . . . . . ..,1 I

Other family. . . . . . . . . . . . . .....2 I

Friend/co-worker. . . . . . . . . . . . . .3 |=> SKIP 10 Q. 29

Library . . . . . . . . . . . . . . . ........4 I

Store . . . . . . . . . . . . . . . . . ..,.....5 I

Other . . . . . . . . . . . . . . . . . .......11 |
25.

26a

$10 - 14.99. . . . . . ........3 | Q. 2 9

$15 - $19.99. . ., . ........4 I

$20 or more. . . . . . ........5 I

Not sure. . . . . . . . . . . . . . . 6 |

Where did you obtain the music for that tape? MULTIPLE RECORD IF NECESSARY

Music on radio. . . . . . . . . , . . . . . . . . . . . . . . . . . .1

Music on TV. . . . . . , . . ..., . . . . . . . . . . ........2

Own prerecorded record/cassette/CD. .. ..... 3

Someone else’s record/cassette/CD. .. ...... 4

Tape you had made. . . , . . . . . . , . . . . . . . . . . . , . .5

Tape someone else had made. . . . . . . . ........6

Other (SPECIFY)

. . . . . . . . . . . 12

Not sure. . . . . . . . . . . . . . . . . . . . . ~ . . . . . .13

Did the audiotape you made contain one or more whole LPs, cassette albums or

CDs?

Yes, whole LPs/albums/CDs. . . . , . . . .1

No. . . . . . . . . . . . . ., . . . . . . . . . . . . . , . ..2

Not sure. . . . . , . . . . , . . . . . . . . . . . .3

26b. Did the audiotape you made (also) contain a mixture of selections from

LPs, 45’s , cassettes or CDs?

Yes, mixture. . . . . . . . . . . . . . . . .1

No. . . . . . . . . . . . . . . . . . . . , . .....2

Not sure. . . . . . . . . , . . . . . .3

27. About how much of your personal time, in all, was taken up in

assembling the materials and making that tape?

HOURS MINUTES

None. . . . . , . . . 0

Not sure. . . , .99

28a. Do you recall what grade of audiotape you used to make that recording?

Yes, recall. . . . . . . . . .1

No. . . . . . . . . . . . . . . ....2 SKIP TO Q. 29

Not sure. . . ........3 SKIP TO Q. 2 9
Metal tape/Type IV. . . . . . . . . . . . . ........3

Other (SPECIFY)

. . . . . . . . . . . . . 4

Not sure. . . . . . . . . . . . . . . . . . . . . . . ........5

29. People have different types of audio recordings . We’d like to know a

little about the types of recordings that you own. Approximately how

many (ITEM) do you own:

RANGE NOT

NONE 1-10 11-25 26-50 51-100 100+ SUR E

a . Compact disks. . . . . . . . . . . . . 1 2 3 1~ 5 6 7

b. 45 Records. . . . . . . . . . . . . . . . 1 2 3 4 5 6 7

c . LP Records. . . . . . . , . . . . . . . . 1 2 3 4 5 6 7

d. Audiotapes. ......, . . . . . . . . 1 2 3 4 5 6 7

IF NO AUDIOTAPES IN Q.29d, SKIP TO Q. 30a

Of the audiotapes you own, how many are:

e . Pre-recorded

audiocassettes. . . . . . . . . . 1 2 3 4

f. Audiotapes tha t

you have made, . . . . . . . . . . 1 2 3 4

5 6 7

5 6 7

9“ Audiotapes someone

else made for you. . . . . . . 1 2 3 4 5 6 7

IF “BOUGH T

W IN Q.24a, SKIP TO Q.30b

30a . Have you ever purchased a record, prerecorded audiocassette or CD ?

Yes. . . . . . , .1

No. . . . . . . . .2 SKIP TO Q. 38a

Not sure. . .3 SKIP TO Q. 38a

30b. When was the last time you purchased a record, prerecorded audio -

cassette or CD?

Today, . . . . . . . . . . . ........0

Number of Days Ago. ......1

Number of Weeks Ago. .....2

Number of Months Ago. . ...3 — — RECORD ON FLYSHEET

Number of Years Ago. ..... 4 — — RECORD ON FLYSHEET

Not sure. . . . . . . . . . . ,5
LP records. . . . . . . . . . . . . . . . . . ....2 None. . . . .00 Not sure. .9 9

45 records. . . . . . . . . . . . . . . . . . ....3 None. . . . .00 Not sure. .9 9

CDs. . . . . . . . . . . . . . . . . . . . . ........4 None. . . . .00 Not sure. .9 9

Not sure. . . . . . . . . . . . . . . . . . . . . . . .5

32. What (was/were) the title of the recording(s) you purchased and the name

of the performer or group? IF MORE THAN THREE, ASK FOR THE FIRST THREE.

ITEM 1 ITEM 2 ITEM 3

TITLE:

PERFORMER/GROUP: — .

Not sure. . . . . . . . . . , . . 0 0 0

33. Was the recording of (ITEM) on record, audiocassette or CD ?

Record . . . . . . . . . . . . . . 1 1 1

Cassette . . . . . . . . . . . . 2 2 2

CD. , . . . . . . . . . . . . . . . . 3 3 3

Not sure. . , , . . . 4=>Q.37a 4=>Q.37a 4->Q.37 a

34a. How much did you pay for it? Your best estimate is fine .

ITEM 1 ITEM 2 ITEM 3

Less than $5. . ........ 1 1 1

$ 5 - 9.99. . . . ........ 2 2 2

$10 -14.99. . . . ........ 3 3 3

$15 -19. 99. . . . ........4

$20 or more. . . . . . . . . . ,5

4 4

5 5

Not sure. . . . . . . . . . . . .6 6 6

34b. At the time you bought this (record/cassette/CD) did you expec t

to tape from it ?

Yes. . . . . . . . . . . . . . . . . 1 1 1

No. . . . . . . . . . . . . . . . . . 2 2 2

Not Sure. . . . . . 3 3 3

34C. Have you made a tape from this (record/cassette/CD)?

Yes. . . . . . . . . . . . . . . . . 1 1 1

No. . . . . . . . . . . . . . . . . . 2 2 2

Not Sure. ,..., 3 3 3
No. . . . . . . . . . . . . . . . . . . .2=> Q.37a

Not sure. . . . . . . . . .3=> 0.370

36. Before buying it, had you heard th e

ROTATE LIST

( )Radio or television. ... l

( )Live concerts. . ........ 2

( )Records , prerecorded

cassettes or CDs. . . . .3

( )Tapes made by

you or others. .. ..... 4

2-> Q.37 a 2=> Q.37a

3=> Q.37a 3=> Q.37a

recording or the performer on:

1

2

3

4

1

2

3

4

IF ONE MONTH OR MORE AGO IN Q. 30b, SKIP TO Q. 37e

37a. Not counting the purchase that you just told me about, when was the nex t

most recent time you purchased a record, prerecorded cassette or CD?

Today. . . . . . . . . . . . ........0

Number of Days Ago. . . . ...1

Number of Weeks Ago. . . . . .2

Number of Months Ago. ....3 — — RECORD ON FLYSHEET

Number of Years Ago. ..... 4 —— — RECORD ON FLYSHEET

Not sure. . . . . . . . . . . .5

IF 12 MONTHS OR MORE IN Q. 37a, SKIP TO Q. 37e

37b. What did you buy on that occasion? How many?

NUMBER

Prerecorded cassettes. . . . . . . .1 — None. . . . .00 Not sure. . 99 RECORD ON FLYSHEET .

LP records. . . . . . . . . . . . . . . . . ..2 None. . ..00 Not sure. .9 9

45 records. . . . . . . . . . . . . . . . . . .3 None. . . . .00 Not sure. .9 9

CDs. . . . . . . . . . . . . . . . . . . . . .....4 None. . . . .00 Not sure. .9 9

Not sure. . . . . . . . . . . . . . . . . . . . .5

IF ONE MONTH AGO OR MORE IN Q.37a, SKIP TO Q. 37e

37c. On how many occasions, in all, have you purchased a record, pre -

recorded cassette or CD in the past month?

IF ONLY TWO, SKIP TO Q. 37e

Not sure. . . . . . . . . . . . . . . . . .99
U

Prerecorded cassettes .. ...... ; None. . . . .00 Not sure. .9 9

LP records. . . , . . . . . . . . . . . . . . . .2 None. . . . .00 Not sure. .9 9

45 records. . . . . . . . . . . . . . . . . . . .3 None. . . . .00 Not sure. .9 9

CDs. . . . . . . . . . . . . . . . . . . . . ......4 — - None. . . . .00 Not sure. .9 9

IF PRERECORDED CASSETTES PURCHASED IN Q. 31 OR Q. 37b, SKIP TO Q. 38a

37e. When was the last time that you purchased a prerecorded audiocassette?

Today. . . . . . , . , . . . . . . . . . . .0

Number of Days Ago. . , . ...1

Number of Weeks Ago. . . . ..2

Number of Months Ago. . . . .3 .— —

Number of Years Ago. . . . . ,4 . —

Not sure. . . . . . . . . . . . . .5

Never. . . . . . . . . , . . . . . . .6

38a. Has anyone ever given you a record, audiotape or CD as a gift?

Yes.. .....1

No. . . . . . . . .2 SKIP TO Q. 40

Not sure. . . 3 SKIP TO Q. 40

38b. When was the last time that someone gave you one as a gift?

Today. . . . . . . . . . . . . . . . . . . ,0

Number of Days Ago. . . . . . .1

Number of Weeks Ago. . . . . .2

Number of Months Ago. . . . .3 — — RECORD ON FLYSHEET

Number of Years Ago. . . . . .4 — — RECORD ON FLYSHEET

Not sure. . . . . . . . . . . . . .5

IF 12 MONTHS OR MORE IN Q. 388, SKIP TO Q. 38E

38c . What did you receive on that occasion? How many?

NUMBER

Prerecorded audiocassette. . 1 None. . . . .00 Not sure. . 99 RECORD ON FLYSHEET

Home made audiotape, . . . . . . .2 None. . . . .00 Not sure. .9 9

LP records. . . . . . . . , . . . . ....3 None. . . . .00 Not sure. .9 9

45 records. . . . . . . . . . . . . . ...4 None. . . . .00 Not sure. .9 9

CDs. . . . . . . . . . . . . . . . ........5 None. . . . 00 Not sure. .9 9

Not sure. . . . . . . . . . . . . . . . . . .6
NUMBER

No others. . ..0 0

Not sure. ....9 9

IF PRERECORDED CASSETTE TAPES REPORTED IN Q. 38c, SKIP TO Q. 40

38e. When was the most recent time, if ever, that you received a

prerecorded audiocassette as a gift?

Today. . . . . . . . . . . . ........0

Number of Days Ago. ......1

Number of Weeks Ago. .....2 . —

Number of Months Ago. ....3 .— —

Number of Years Ago. ..... 4 — —

Not sure. . . . . . . . . . . . . .5

Never. . . . . . . . . . . . . . . . .

40. In the past year, have you used an audio recorder to tape music from

either radio, television, records, tapes or CDs ?

Yes. . . . . . . . . . . .1

No. . . . . ........2

Not sure. ., ..3

410 . In the past year, have you used an audio recorder to tape anything els e

at home, including voices , answering machine messages and dictation?

Yes. . . . , . . . . . . .1

No. . . . . . . . . . . . .2 SKIP TO Q. 43a

Not sure. . . . . 3 SKIP TO Q. 43a
a .

b.

c .

d.

e .

f .

g.

h.

i .

j .

Family member voices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .....1

Music performed by you, family members, or friends. .... 2

Special occasions , like birthdays and weddings. .. ...... 3

Telephone answering machine messages. . . . . . . . . . . ........4

Letters , messages and reports for work or school. . . . . . .5

Messages or instructions for others. . . . . . , . . . . . . . . . . . . .6

Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Lectures , classes or sermons. . . . . . . . . . . . . . . . . . . . . . . . . . .8

Dictation for home or office. . . . . . . . . . . . . . . . . . . . . . . . ...9

None of the above. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

IF NO ‘YES" IN Q. 41b, SKIP TO Q. 43a

41c . When was the last time you made a recording of (this/any of these) type?

Today. . . . . . . . . . . . ........0

Number of Days Ago. . . ....1

Number of Weeks Ago. . ....2

Number of Months Ago. ....3 — —

Number of Years Ago. ..... 4 — —

Not sure. . . . . . ......5

IF 12 MONTHS OR MORE IN Q. 41c, SKIP TO Q. 43a

41d. Do you recall what grade of audiotape you

Yes, recall. . . . . . . . . .1

No.. . . . . . . . . . . . . . ....2 SKIP TO Q. 41f

Not sure. . . ........3 SKIP TO Q. 41 f

41e . What grade of tape did you use?

RECORD ON FLYSHEET

RECORD ON FLYSHEET

used to make that recording?

Normal bias/ferric oxide/Type I. .. ..... 1

High bias/chrome/Type II. . . . . . . ........2

Metal tape/Type IV. . . . . . . . . . . . . ........3

Other (SPECIFY)

. . . . . . . . 4

Not sure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..5
90 minute. . . . . . . . . . . ...3

Other (SPECIFY)

—“ . . 4 “

Not sure. . . . . . . . . . . . . .5

IF ONE MONTH OR MORE IN Q. 41c, SKIP TO Q. 43a

42. During the past month, on how many occasions, in all, have you

made an audio recording of any of these kinds?

OCCASIONS

None. .. ..... 0

Not sure. . . .99

43a. Have you ever made an audiotape of music from radio or television?

Yes. ......1

No. . . . . . ..2 SKIP TO Q. 44a

Not sure. . 3 SKIP TO Q. 44a

43b. When was the most recent time that you made an audiotape

of music from radio or television?

Today. . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . . ...1

Number of Weeks Ago. .....2

Number of Months Ago. ....3 — — RECORD ON FLYSHEET

Number of Years Ago. ..... 4 — — RECORD ON FLYSHEET

Not sure. . . . . , . . . . . .5

IF 12 MONTHS OR MORE IN Q. 43b, SKIP TO Q. 44a

43c . How many different tapes did you make on that occasion?

Number

Not sure. . . .99

IF MORE THAN ONE TAPE MADE, ASK ABOUT LAST TAPE MADE

43d. Did you use a 30 minute, 60 minute, or 90 minute tape?

30 minute. . . . . . ........1

60 minute. . . . . . . . . . . . . .2

90 minute. . . . . . ........3

Other (SPECIFY)

. . . . 4

Not sure. . . . . . . . . . . . , .5
Selections or singles. .... 2

Both. . . . . . . . . . . . . . . . . . . . . .3

Music video (vol. ). .. ..... 4

Televised concert (vol.). . 5

Other (S PE CIF Y)

. . 6

Not sure. . . . . . . . . . . . . . . . . .7

43f. Did you make that tape to keep or to use only temporarily?

To keep. . . . ........1

Use temporarily. . . .2

Not sure. . . . . .3

43g. Did you use a new blank audiotape to make the recording or did you

tape over another recording?

New blank. . . . . .1

Taped over. . . . . .2

Not sure. . . . .3

IF ONE MONTH OR MORE SINCE MOST RECENT TAPING IN Q. 43b, SKIP TO Q. 44a

43h. During the past month, on how many occasions, in all, have y o u

made audiotapes of music from radio or television?

OCCASIONS

Not sure. . .99

No other. . . 00

44a. Have you ever taped music from a record, prerecorded audiocassette or CD ?

Yes. . . . . . .1

No. . . . . . ..2 SKIP TO Q. 54, PAGE 31

Not sure. . 3 SKIP TO Q. 54, PAGE 31

44b. When was the most recent time that you taped music from a record,

prerecorded audiocassette or CD ?

Today. . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . ....1

Number of Weeks Ago. .....2

Number of Months Ago. ....3 — — . RECORD ON FLYSHEET

Number of Years Ago. ..... 4 — — RECORD ON FLYSHFET

Not sure. , . . . . . . . , . . .5
Not sure. ...9 9

IF MORE THAN ONE TAPE IN Q. 44c, ASK ABOUT THE LAST TAPE.

44d. Were you taping one or more whole LPs, cassette albums or CDs ?

Yes. . . . . . . . . ........1

No. . . . . . . . . . . . . . . . .,2 SKIP TO Q. 44k

Not sure. . . . . . . 3 SKIP TO Q. 44k

IF ANY WHOLE RECORDS, TAPE ALBUMS OR CDS COPIED, ASK:

44e. How many complete LPs, cassettes albums or CDs did you copy onto

that tape ?

One. . . . ........1

Two. . . . . . . . . ...2

Three. . . . . . . . . .3

Not sure. . . ,4

ASK FOR EACH REPORTED IN Q. 44e

44f. What (was/were) the title of the albums(s) you taped and the name

of the performer or group ?

ITEM 1 ITEM 2 ITEM 3

TITLE: ———--- .—. —

PERFORMER: —

Not sure. . . . . . . . . .

44g. Was the recording of (ITEM) on record, prerecorded cassette or CD ?

ITEM 1 ITEM 2 ITEM 3

Record . . . . . . . . . . . . . . 1 1 1

Prerecorded cassette. . 2 2 2

CD. . . . . . . . . . . . . . . . . . 3 3 3

Not sure. . . . . . . . . . 4 4 4
ITEM 1 ITEM 2 ITEM 3

Own original . . . . . . . . . 1 1 1

Household member . . . . . 2 2 2

Other family . . . . . . . . . 3 3 3

Friend. . . . , . . . ........4 4 4

Other (SPECIF Y )

44i . Did you get the lyrics or liner notes to the recording from anyplace ?

Yes. . . . . . . . . . . . . . . . . . .1 1 1

No. . . . . . . . . . . . . . . . . . . .2=>Q.44k 2=>Q.44k 2=>Q.44k

44j . Where did you get them?

44k . Were you (also) taping selections from LPs, singles, cassettes, or

CDs onto that tape?

Yes. . . . . . . . , . . , . . . .1

No. . . . . . . . . . . . . . . ,.2 SKIP TO Q. 45a

Not sure, . . . . , . 3 SKIP TO Q. 45a

441. In taping these selections, how many (R E AD ITEM) did you use?

45 Records. . . . . . . . . . . . . . / Not sure. , .99

LP Records. . . . . . . . . . . . . . / Not sure. . .99

CDs. . . . . . . . . . . . . . . . . . . . . / Not sure. . . 9 9

Pre-recorded

audio cassettes. . . . — / — Not sure. ..9 9

Home-made audio tapes. . .

/ Not sure. ..9 9
Own original . . . . . . . . . 1

Household member . . . . . 1

Other family . . . . . . . . . 1

Friend. . . . . . . . ........1

Other ( SPE CI FY )

. . . . 1

45a. Were you making the tape(s) for yourself, another member of

your household or someone else?

Yourself. . . ........ 1

Household member. ..2 SKIP TO Q. 45c

Someone else. . . . . . .3 SKIP TO Q. 45c

45b. Did you make that tape to keep or to use only temporarily?

45c .

45d.

45e .

To keep. . . . . . . . . . . . . . , .1

Use temporarily. . . . . . . .2

Not sure. . . . . . . . . .3

Did you use a new blank audiotape to make the recording or did you tape

over another recording?

New blank. ...... 1

Taped over. ...., 2

Not sure. ..... 3

Did you use a 30 minute, 60 minute, or 90 minute tape?

30 minute. . . . . . . . . , . . . .1

60 minute. . . . . . . . . . . . ..2

90 minute. . . . . . . . . . . . . .3

Other (sPECIFY)

. . . . 4

Not sure. . . . . . . . . . . . . .5

Do you recall what grade of tape you used to make that recording?

Yes, recall. . . . . . , . . .1

No. . . . . . . . . . . . . . . . . . .2 SKIP TO Q. 45g

Not sure. . . . . . . , . . .8 SKIP TO Q. 45g
Metal tape/Type IV. . . . . . . . . . . . . . . . . . . . .3

Other (SPECIFY)

Not

45g. About how

. . . . . . . . . 4

sure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

much of your personal time, in all, was taken up i n

assembling the materials and making the tape?

HOURS MINUTES

None. . . . . . . . . .0

Not sure. . . . .99

45h. Why did you copy the recording? Anything else?

45i . To the best of your knowledge, could you have purchased a record,

prerecorded cassette or CD with the same material, if you had wanted ?

Yes. . . . . . . . . . . . . .1

No. . . . . . . . . . . . . . .2 SKIP TO Q. 450

Not sure. . . .3
READ THOSE NOT VOLUNTEERED IN Q. 45h

( )1. You wanted to protect you r

originals from damage or wear. . . . . . . .1

( )2. You wanted to be able t o

play the recording on a tape player. . 1

( )3. You wanted to get better qualit y

sound . . . . . . . . . . . . . . . . . . . . . . . ........1

( )4. It was less expensive than

purchasing the recording. . . . . ........1

( )5. You wanted a longer playing time. .... 1

( )6. You wanted to create a customized

selection of music. . . . . . . . . . . . . . . . . . .1

( )7. Buying the prerecorded musi c

was inconvenient for you. . . . . . . . . . . . .1

( )8. You already had a copy of the

music in prerecorded form and

didn’t want to buy another. . . ........ 1

( )9. The purchase price was highe r

than you were willing to pa y

for that recording. . . . . . . . . . . ........1

2

2

2

2

2

2

2

2

2

3

3

3

3

3

3

3

3

3

45k. To the best of your knowledge , how much do you think it would have

cost to buy that that material on record, prerecorded cassette or CD ?

Less than $5. . . . . . . . . . . . .1

$ 5 - 9.99. . . . . . . ........2

$10 -14. 99. . . . . . . ........3

$15 -19.99. . . . . . . ........4

$20 or more. . . . . . ........5

Not sure. . . . . . . . . . . .6

451. If you had not been able to make that tape, do you think that you

would have purchased (that recording/another copy of that recording)

or not?

Would have purchased. ..... 1 SKIP TO Q. 45n

Would not. . . . . , . . . . . . . . . ..2

Not sure. . . . ., ......,8 SKIP TO Q. 450
45n. If you had bought that recording, would it have been in addition

to other recordings you have purchased, or in place of othe r

recordings you purchased?

In addition. .. ...... 1

In place. . . . ........ 2

Not sure. . . . . . . . .3

450. To avoid making it yourself, would you have been willing to pay someone

else to make that tape for you?

Yes. .. ......1

No. . . . . . . . ..2 SKIP TO Q. 46 a

Not sure. .3

45p. In that case , what is the most that you would have been

willing to pay someone to make that tape for you, not

counting the cost of the blank tape?

$ — —“ — —

None. . . . . . . . . . . . . . . . . . . . 0

Not sure. . . . . . . , . . . . . . . .999

IF ONE MONTH. OR MORE AGO IN Q. 44b, SKIP TO Q. 47a

46a . Not counting the time you just told me about, when was the next most recent

time that you made an audiotape from a record, prerecorded cassette or CD ?

Today, . . . . . . . . . . . . . . . . . . .0

Number of Days Ago. . . . . . .1

Number of Weeks Ago. . . . . .2

Number of Months Ago. ....3 — —

Number of Years Ago. . . . . .4 — —

Not sure. . . . . . . . . . . .5

IF ONE MONTH OR MORE IN Q. 46a, SKIP TO Q. 47a

46b. During the past month, on how many occasions, in all, did you

make an audiotape from a record, prerecorded cassette or CD?

— — NUMBER OF TAPING OCCASIONS

Not sure. ..9 9

47a . In the past year, from about how many persons outside of your household,

if any, have you borrowed records , prerecorded cassettes or CDs?

None. . . . ..00 SKIP TO Q. 4 8

Not sure. .99
Weekly. . . . . . . . . ........1

Monthly. . . . . . . . ........2

Few times a year. ...... 3

Rarely. . . . . . . . . ........4

Never. . . . . . . . . . . . . . ....5

Not sure. , .. ...... 6

47c . Do you belong to any music swap clubs?

Yes. . . . . . . . .1

No. . ........ 2

Not sure. . . .3

IF UNDER 17 YEARS OLD, SKIP TO Q. 54

People tape from records, prerecorded

(PAGE 31)

cassettes and CDs for many reasons. They

may make individual tapes for mare than one reason. I’m going to mention some

reasons why people sometimes tape and ask if they are among the reasons why

you have made tapes.

RANDOM START Q. 48 TO Q. 53

( )48a. Some people tape selections from several records, cassettes or CDs to

create their own customized program of music on tape. Have you ever made

a tape, mainly for this reason ?

Yes. .. ..... 1

No. . . . . . . . .2 SKIP TO 49a

Not sure. . .3

48b. When was the last time you made a tape mainly for this reason?

Today. . ........ 0

Days ago. . . . . . .1

Weeks ago. . . . . .2

Months ago. . . ..3 — —

Years ago. . . . . .4 — —

Not sure. .5

IF ONE MONTH OR MORE IN Q. 48b, SKIP TO Q. 49a

c . How many times in the past month have you made a tape

mainly for this reason?

NUMBER

Not sure. ..9 9
mainly for this reason?

Yes. . ......1

No. . . . . . . . .2 SKIP TO 50a

Not sure. . . 3 SKIP TO 50a

49b. When was the last time you made a tape mainly for this reason?

Today . . . . . . . . . . 0

Days ago. . . . . . . 1

Weeks ago. . . . . . 2

Months ago. . . . . 3 — —

Years ago. . . . . . 4 — —

Not sure. . .5

IF ONE MONTH OR MORE IN Q. 49b, SKIP TO Q. 50a

49c . How many times in the past month have you made a tape

mainly for this reason?

NUMBER

Not sure. . . . .99

( )500 . Some people make tapes of their own records, cassettes and CDs, so tha t

they can play them in their car, Walkman or elsewhere . Have you ever

made a tape of a record, cassette or CD that you owned mainly for thi s

reason?

Yes. . . . . . . .1

No. . . . . . . . .2 SKIP TO 51a

Not sure. . . 3 SKIP TO 51a

50b. When was the last time you made a tape mainly for this reason?

Today . . . . . . . . . . 0

Days ago. . . . . . . 1

Weeks ago... . . . 2

Months ago. . . . . 3 — .

Years ago. . . . . . 4 — —

Not sure, . .5

IF ONE MONTH OR MORE IN Q. 50b, SKIP TO Q. 51a

50c . How many times in the past month have you made a tape

mainly for this reason?

NUMBER

Not sure. . .99
Yes. .. ..... 1

No. . . . . . . . .2 SKIP TO 52a

Not sure. .. 3

51b. When was the last time you made a tape mainly for this reason?

Today . . . . . . . . . . 0

Days ago. . . . . . . 1

Weeks ago. . . . . . 2

Months ago. . . . . 3 — —

Years ago. . . . . . 4 — —

Not sure. . .5

IF ONE MONTH OR MORE IN Q. 51b, SKIP TO Q. 52a

c . How many times in the past month have you made a tape

mainly for this reason?

NUMBER

Not sure. . . . 9 9

( )52a. Some people make tapes of other people’s records, cassettes and C DS

that they would like to listen to, bu t probabl y would not buy — — .

Have you ever made a tape mainly for this reason?

Yes. . . . . ...1

No. . . . . . . . .2 SKIP TO 53a

Not sure. . . 3 SKIP TO 53a

52b. When was the last time you made a tape mainly for this reason?

Today. ....,.... 0

Days ago. . . . . . . 1 — —

Weeks ago. . . . . . 2

Months ago. . . . . 3 — —

Years ago. . . . . . 4 — —

Not sure. . .5

IF ONE MONTH OR MORE IN Q. 52b, SKIP TO Q. 53a

52c. How many times in the past month have you made a tape

mainly for this reason ?

NUMBER

Not sure. . .99
Yes. . . . . . . .1

No. . . . . . . . .2 SKIP TO 54

Not sure. .. 3

53b. When was the last time you made a tape mainly for this reason?

Today . . . . . . . . . . 0

Days ago. . . . . . . 1

Weeks ago. . . . . . 2

Months ago. . . . . 3 — —

Years ago. . . . . . 4 — —

Not sure. . .5

IF ONE MONTH OR MORE, SKIP TO Q. 54

53c . How many times in the past month have you made a tape

mainly for this reason?

NUMBER

Not sure. . .99
pp, 

—— — 

( )a.

( )b.

( )C.

( )d.

( )e.

you rate the acceptability to yo u

on that?

Not at al l

Acceptabl e

to do

Making a taped copy

—own use of a record, cassett — e

or CD that you own . . . . . . . . . . 1

Making a taped copy to giv — e

—to a friend of a record — ,

cassette or CD that you own.. 1

Making a taped copy to sel — —l

of a record, cassette o r

CD that you own. . . . . . . . . . . . . . 1

Making a taped copy for your

own use of a complet e

record, cassette or CD tha t

you borrowed . . . . . . . . . . . . . . . . . 1

Making a taped copy for your

own use of selections from

several records, cassette s

or CDs that. you borrowed . . . . . 1

55. How familiar would you say that you

of (READ ITEM) or don’t you have an opinion

2

2

2

2

2

a r e

3

3

3

3

3

4

4

4

4

Perfectl y

Acceptable N o

to do Opinion

5 6 7 8

5 6

7 8

5 6 7 8

5 6 7 8

4 5 6 7 8

with copyright laws and their

application to home audio taping? Would you say that you are -- extremel y

familiar , quite familiar , slightly familiar or not at all familiar ?

Extremely familiar. . . . , . . . . . .1

Quite familiar. . . . . . . . . . . . . . .2

Slightly familiar. . . . . . . . . . . .3

Not at all familiar. . . . . . . . ..4

Not sure. . . . . . . . . . . . . . . . .5

IF UNDER 17 YEARS OF AG E, SKIP TO DEMOGRAPHICS (PAGE 33 )
Not at al l Perfectly N o

Fai r Fai r Opinion

ROTATE LIST

( )a. Present practices of home

taping from records, pre -

recorded audiocassette s

and CDs are to the

recording industr y

( )b. Present practices of home

taping from records, pre -

recorded audiocassette s

and CDs are to song writers

and performer s

1 23456 7

1 23456 7

8

8

( )c. present practices of home

taping of records, audio -

cassettes and CDs are to the

average consumer 1 23456 7 8

57. Now using the same scale running from 1 , meaning not at all fair, to 7 ,

meaning perfectly fair, I’d like to know how fair you think each of the

following suggestions would be or don’t you have an opinion?

Not at al l Perfectl y No

Fai r Fai r Opinion

( )a. New audio recorders should be

built so they can’t cop y

commercial recordings

( )b. Audio recordings should be

made so they can’t be copied

( )c. A fee should be charged on

audio recorders and paid to

copyright holders to compensate them for home taping

( )d. A fee should be charged o n

blank audiotapes and paid to

copyright holders to compensate them for home taping

( )e. Current home taping practice s

should be left unchanged

1 23456 7

1 23456 7

1 2 3 4 5 6 7

1

1

23456 7

23456 7

8

8

8

8

8
D1. How old are you?

— — age

D2a. Ar e

f o r

Refused. ..99

you currently employed

work, retired, going to

full time, part time, unemploye d

school , keeping house or something

and lookin g

else ?

Employed full time. . . . . . . . . . . . . . . ( ( -1

Employed port time. . . . . . . . . . . . . . . . ..—- 2

Unemployed and looking for work. . . . . -3 SKIP TO D3

Retired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4 SKIP TO D3

Going to school. . . . . . . . . . . . . . . . . . . . . -5 SKIP TO D3

Keeping house. . . . . . . . . . . . . . . . . . . . . . . -6 SKIP TO D3

Disabled (vol. ). . . . . . . . . . . . . . . . . . . . . -7 SKIP TO D3

Other (SPEC IF Y ):

. . . . . . . . . . . . . . -13 SKIP TO D3

Refused. . . . . . . . . . . . . . . . . . . . . . . . . . . . .—-1 4

D2b. Do you use a computer at work?

Yes. . . . ....1

No. .. ...... 2

D3. How many working computers, if any, do you have in your household?

None. . . . ........1

One. . . . . ........2

Two. . . . . . . . . . . . .3

Three or more. . .4

Refused. . . . . . . . .5

04. What Is highest grade or year of regular school you have completed?

No formal schooling. . . . . . . . . . .1

First through 7th grade. . . .... 2

8th grade. . . . . . . . . . . . . ........3

Some high school. . . . . . ........4

High school graduate. . . . . . . . . .5

Some college. . . . . . . . . . . .. .....6

Four-year college graduate. ... 7

Some graduate school. . . . . . . . . .8

Graduate degree. ..., . . ........ 9

Refused. . . . . . . . . . . . . ....10
Asian or Pacific Islander. . . . . . . . . . . .3

Eskimo, Aleut or American Indian. . . . .4

Othe r . . . 5

Refused. . . . . . . . . . . . . . . . . . . ......6

IF UNDER 17 YEARS OF AGE, SKIP TO 07

06. Which of the following categories best describes the total household income

before taxes in 1987? Your best estimate is fine .

Nothing. . . . . . . . . . . . . . . . . . .1

Less than $5,000. . ........2

$5000 to $9,999.00 , , . . . . ..3

$10,000 to $19,999. ....... 4

$20,000 to $29,999. . . . . . , .5

$30,000 to $39, 999. .......6

$40,000 to $49, 999. ....... 7

$50,000 to $74,999. ....... 8

$75,000 to $99,999. ....... 9

$100,000 or more. . . . . . . . .10

Refused. . . . . . . . . . . . .11

D7. How many persons, including both adults and children, live in this household ?

— —

Only respondent. ....1 SKIP TO D9

Refused. . . . . . . . . . . .99

IF UNDER 16 YEARS OLD, SKIP TO 09 —

08. Which of the following categorie s best describes how much you

personally earned from all sources, before taxes, in 1987’?

Nothing. . . , . . . . . . . . . . . . . . .1

Less than $5,000. . . . . . . . ..2

$5000 to $9, 999. . . ........3

$10,000 to $19, 999. ....., . 4

$20,000 to $29,999. . . . . . , . 5

$30,000 to $39,999. ....... 6

$40,000 to $49,999. . . . . ...7

$50,000 to $74,999. . . . . . . . 8

$75,000 to $99,999. ....... 9

$100,000 or more. . . . . . . . .10

Refused. . . . . . . . . . . . .11

20-900 - 89 - 7
No. . . . . . . . .2 SKIP TO D11

D10. How much is your allowance , per week? (ON AVERAGE)

$ —— —“— —

None. . . . . . . . . . . ........0

Not sure. . . . . . . . . . . . .999

FROM OBSERVATION

D11. Sex

Male. . . . ....1

Female. ..... 2

Thank you for your assistance . That completes our interview.

Note : State/Region is coded in Sample Point. Census designation as SMSA Central

City or SMSA Remainder or Non-SMSA is coded in Sample Point.
1-11 MONTHS

5 a .

6b .

30b .

37a .

38b .

41c .

43b .

44b .

—12 MONTHS OR MORE — —

20a/b . TAPES. . . . . . . . . . . . . . . . OTHER

24a . BORROWED, GIVEN. . . . . . BOUGHT

31. PRERECORDED

37b. PRERECORDED

38c. PRERECORDED

CASSETTE OTHER

CASSETTE OTHER

CASSETTE OTHER
e oowg tabes ae taeote e

ppp

port Survey of Home Taping and Copying to the numbers in the SRBI report. Due to

Final Report (Vol. 2) prepared for OTA by space limitations, tables have been abbreviSchulman, Ronca, and Bucuvalas, Inc. Theta- ated.

Table 2-1. - Importance of Music

Question 9: How important an activity do you consider listening to music–extremely important quite important, slightly important, or not important at all?

Unweighed Not at Not

base Extremely Quite Slightly all sure

Total: . . . . . . . . . . . . . . . . . . . . . . . . . .

Age:

10 14

15-19 . . . : : : : : :

20-24 . . . .

25-29 . . . . . .

30-3 4

3564. “:. .

65+ .

Sex:

Mal e

Femal e

Race:

Whit e

Black ~ :

(1,501)

( 57)

( 118)

( 140)

( 173)

( 180)

( 619)

( 197)

( 594)

( 907)

(1,288)

( 131)

24

27

39

36

22

20

21

16

22

25

23

32

32

20

33

34

35

29

32

35

31

33

33

23

34

41

22

24

34

40

35

34

34

33

33

32

10

12

5

7

9

8

13

12

12

9

10

11

1

—- —

2

4

1

1

1

1

253
Question 11: Not including music on radio and television, approximately how much time in the lastseven days did you spend

listening to music on records, audiotapes and CDs, not including background music in public places (e.g., stores,

offices, elevators, bars).

Unweighed Less 1- 3.5- 7.- 14- 21- 28-

base None 1 HR 3.5 7 14 21 28 35 35+

Total ... , . . . . . . . . . (1,501) 43 3 22 11 10 5 2 1 2

Age:

10-14, ., . . . . . . . . . .

15-19 ..., . .

20-24 . . . . . . . . . . .

25-29 . . . . . . . . . . . . .

3(-34 . . . . . . . . . . .

35-64 . . . . . . . . . . .

65+ . . . . . . . . . .

Sex:

Male . . . . . . . . . . . . . .

Female . . . . . . . . . . .

Race:

57)

118)

140)

173)

180)

619)

197)

18

6

28

30

40

53

71

12

4

1

2

3

3

1

28

34

16

20

31

21

13

14

18

17

10

10

10

5

14

15

15

19

7

8

1

4

10

12

8

5

3

1

1

6

3

2

1

1

—

2

3

4

●

1

●

8

4

4

4

1

1

1

3

3

23

21

11

10

10

9

6

5

2

1

1

1

2

2

594)

907)

40

45

White . . . . . . . . . . . . . (1288)

Black . . ., ... ,., ( 131)

43

43

3

3

22

19

11

11

10

8

6

2

6

5

3

2

2

1

1

2

6

Place:

City . . . . . . . . ( 440)

Suburb .., ,,, ,. (680)

Rural . . . . . . . . . . ( 381)

10

9

11

1

1

1

1

3

2

46

39

46

2

3

5

20

25

20

12

11

9

1

2

2

Region:

East . . . . . . . . . . . . . . ( 311)

Midwest . . . . . . . . ( 370)

south. . . . . . . . . . . . . (519)

West, ......,,..,.. (301 )

42

46

46

33

3

2

4

3

25

20

21

24

8

15

9

13

8

9

9

14

6

3

4

8

1

2

2

1

*

1

1

2

4

1

2

2

Importance of

music:

Extremely . . ( 344)

Quite . . . . . . . . . . . ( 492)

SIightly . . . . . . . . . (506)

None . . . . . . . . . . . . . (148)

2

2

7

1—

1

22

36

54

73

1

2

4

7

17

25

26

16

17

14

7

1

14

12

6

2

13

5

1

3

2

1— —
Unweighed Record Tape deck CD Walk Boom

base player Home Car player man box None

Total: . . . . . . . (1,501)

Age:

10-14 ., . ... , ( 57)

15-19 ., . . ( 118)

2024 . . . ( 140)

25-29 ... ., . . . . . . . . ( 173)

30-34 ., ( 180)

35-64 . . . (619)

65+. ( 197)

Sex:

Male. . ( 594)

Female . . . . . . ( 907)

Race:

White ,, . (1288)

Black . . . . . . . . . . . . . . . ( 131)

Place:

City ( 440)

Suburb . ::::::::::. (680)

Rural . ., . . ., ( 381)

Region:

East . . . . . . . . . (311)

Midwest ( 370)

south. . .: .:’::: ( 519)

west, .., ,,, , ( 301)

Income:

Less than $5,000.. . ( 63)

$5,000” $9,999 ( 104)

$10,OOO $19,999 ( 238)

$20,000 $29,999 . (258)

$30,00(-$39,999 . . . . . (206)

$40,000 -$49,999 . . . . . ( 140)

$50,000 -$74,999 ( 118)

$75,000 + . . . . : : : : ( 65)

81

88

86

76

81

88

83

69

81

82

81

83

80

83

79

83

77

81

85

54

76

77

82

81

86

92

82

76

91

94

86

76

83

76

46

77

75

76

74

73

79

75

75

73

77

78

57

58

68

77

74

84

81

91

65

75

74

73

64

73

68

35

70

61

67

49

65

65

65

56

60

71

71

36

34

52

66

65

77

90

89

15 48

17 65

23 79

22 67

17 53

14 49

15 45 2 12

18 51

12 46

16 48 9 49

16 49

15 52

14 40

14 50

13 49

16 46

17 49 9 28

11 27 9 35

15 47

14 47

16 68

26 56

33 59

63

2

73

—

79

—

71

—

702

58

—

642

40 10

62

2

643

63

2

67

3

65

1

632

614

582

613

66

3

662

57 16

49

4

57

3

62

*

60

3

681

70

1

682
Unweighed base:

Record player . . . . . . . . . . . . . . . . . 78

Cassette players . . . . . . . . . . . . . . . . . . 38

Installed in home . . . . . . . . . . . . . . . .

Installed in auto . . . . . . . . . . . . . . . . .

Portable . . . . . . . . . . . . . . . . . . . .

8-track player, , .,, . . . . . . . . . . . . . . . . 43

CD player.....................,,. N A

None . . . . . . . . . . . . . . . . . . . . . . . . . . 17

(1,501)

81

94

20 76

8 65

24 63

NA

15

2

*The Roper Organization, A Study m Tape Recording Practices Among the General Public, June 1979

NA = not applicable

Table 3-1 .–Most Recent Listening

Question 16: When was the last time you listened to music on records, audiotapes, or CDs, not inciuding radio or television or

background music in public places (e.g., stores, offices, elevators, bars)?

Unweighed Past Past Past A year Not

base week month year or more sure,

Total: . . . . . . . . . . . . . . . . . . (1,501) 59 18 11 7 5

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . ( 57) 79 17 4

15-19 . . . . . . . . . . . . . . . . . . . ( 118)

— —

92 7

* 1

20-24 . . . . . . . . . . . . . . . . . . . ( 140)

—

79 11 6 2 2

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . ( 173) 66 9 19 3 3

3(-34 . . . . . . . . . . . ( 180) 56 27 10 3 4

=-~, ,,, ,,, ,,, ,,, ,,, ,, ( 619) 52 21 13 9 5

65+ . ,. ( 197) 33 21 15 19 12

Sex:

Male, ,,, ,., ,,, ,,, ,,, ,,. . .,, ,, ( 594) 61 17 10 8 3

Female, ,,, ,, ..,, ,,, ( 907) 57 19 12 6 6

Race:

White . . . . . . . . . . . . . . . . . . . . . . . (1,288) 60 19 11 6 4

Black . . . . . . . . . . . . . . . . . . . . . ( 131) 55 13 11 14 7

Place:

City . . . . . . . . . . . . . . . . . . . . . . . ( 440) 56 18 13 9 4

Suburb . . . . . . . . . . . . . . . . . . . . . . ( 680) 61 18 11 6 5

Rural . . . . . . . . . . . . . . . . . ( 381) 60 18 9 7 7

Region:

East . . ( 311) 57 17 13 7 6

Midwest, . ., . . .,,.,..,. ( 370) 56 17 15 8 5

South ,,, . . . . . . . . . . . . ( 519) 58 20 11 7 5

West, . . . . . . . . . . . . . . . . . . . ( 301) 68 17 6 6 4
(Base: past year listened)

Unweighed

base Records Tapes CDs Mixed Not sure

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . (1 ,326) 21 64 10 3 2

Age:

10 14 . . . . . . ., ... ( 57) 16 78 4 2

15-19 . . . . . .

—

, . . ( 117) 13 72 10 4

2(-24 ., ... ., : : : : ., ... ( 136) 16 64 15 4 1

25-29 . . . . . . . . . . . . . . . . . . . . . . ( 165) 22 57 14 6 1

30-34 . . . . . . . . ( 170) 23 60 12 4 1

35-64 . . . . . . ( 537) 20 65 9 3 2

65+. ,,, ,,, ,,, . . . . ( 134) 32 57 2 3 6

Sex:

Male ,,. . . . ( 533) 16 64 11 6 2

Femal e ( 793) 24 64 8 2 2

Table 3-13 (Abbreviated).-Source of Recording

Qustions 24a: How did you obtain that (record/tape/CD) - did you buy it, borrow it receive it as a gift, make it, or something

else?

Unweighed self Other Borbase bought bought rowed Given Made Other

Total : (1 ,012) 74 2 1 12 10 1

Age:

10-14 . . ( 34)

15-19 ( 89)

20-24 .: :.”, ‘ :., .’ :,,.. ( 107)

25-29. , ( 129)

30-34 .. .,,:: ‘::: :::::’. ( 136)

3564 . . . . . ( 417)

6 5 + ( 96)

58

84

71

77

74

74

77

8 15

11

15

11

11

12

17

18

5

13

10

12

9

4

—

2

1

3

1

1 —

1

1

* 2

2

.

2

Sex:

Male, . . . . ( 410)

Female .,...., . . ( 602)

78

71

2

1

*

2

7

17

12

7

1

2

Race:

White ,. .,.... ,, ( 886)

Black, ,, . . . . . ( 69)

75

67

2

1

1

—

13

6

8

20

1

4
Question 26b: Did the audiotape you made (also) contain a mixture of selections from LPs, 45s, cassettes, or CDs?

Mixture of Selections in Percent (N = 83)

Whole albums ., . . . . . . . . . . . . . . . . . Yes No Not sure Total

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 29 — 51

No . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 13 46

N.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — 3 4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 21 3

NOTE: Totals may not add due to rounding
Unweighed Past Past Past A year Not

base week month year or more sure Never

Total: . . . . . . . . . . . . . . . . . . . . . (1,501)5 15 38 20

4 17

Age:

10-14. . . . . . . . . . . . . ( 57)

15-19. . . . . . . . . . . . . . . . . . ( 118)

20-24. . . . . . . . . . . . . . . . . . . . ( 140)

25-29. . . . . . . . . . . . . . . . . . . . ( 173)

30-34. . . . . . ( 180)

35-64 . . . . . . . . . . . . . . . . . . ,, ( 619)

65+ .,., ,,, ., . .,, ,,,..,, ( 197)

3

16

13544●

17

29

22

21

17

116

34

44

43

45

44

40

22

88

12

18

20

24

30

6114744

323978

16

37

Sex:

Male . . . . ,., . . . . . ( 594)

Female . . . . . . . . . . . . . . . ( 907)

7416

14

40

37

20

21

35

13

20

Race:

White . . . (1288)

Black . . . . .. ., ., .,.....:: ( 131)

6415

13

39

32

20

18

44

15

29

Place:

city . . . . . . . . . . . . . . . . . . . . ( 440)

Suburb ,.. . . . . . . . . . . . ( 680)

Rural . . . . . . . . . . ( 381)

565

18

15

12

39

39

36

18

22

20

445

17

14

23

Region:

East . . . . . . . . . . . . . . . . . . . ( 311)

Midwest . . . . . ( 370)

south, . . .. ...__..:: ( 519)

West . . . . . . . . . . . . . . . ( 301)

646614

12

17

16

34

42

37

41

22

21

18

22

3553

22

16

17

12

Income:

Less than 5,000. ,. ,,. ( 63)

$5,000-$9,999 . ( 104)

$10,00(-$19,999 :::... ( 238)

$20,000-$29,999 ( 258)

$30,000 -$39,999 .,.;: ( 206)

$40$000-$49,999 ( 140)

$50,000-$74,999 . ...::.::: ( 118)

$75,000+ . . . . . . . . . ( 65)

24

30

23

22

26

18

176

57451273

30

30

20

16

11

1066

3175479

10

27

13

13

13

16

22

21

36

24

34

40

44

47

39

54
Cassettes LPs 45s CDs

(635) (153) (22) (108)

One . . . . . . . . . . . . 68 68 59 65

Two . ., . . ... , ., 17 16 9 20

Three ... . . . . . . . . . ., . . . . . . . . . 8 8 19 3

Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 — 9

Five + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 13 3

Not sure ,., ,. ....., ., ,., 1 1 — —

Mean ......., . . . . . . . . . . . . . 1.73 1.89 2.17 1.81

Table 5-1.-Past Year Taping

Questions 40: In the past year have you used an audio recorder to tape music from either radio, television, records, tapes or

CDs?

Unweighed Not

base Yes No sure

Torah . . . . . . .,, ,,, . . . . . . . . . . . . . . . . . . (1,501)

Age:

10-14 . . . . . . . . . . . ( 57)

15-19 . . . . . . . . . . . . . . . . . .,, .,.,.,,.. ( 118)

20-24 . . . . . . . . . . . . . . ....,,.,.,,,,,. ( 140)

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 173)

30-34............,,,,,, , ( 180)

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . ,,. ( 619)

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 197)

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 594)

Female . . . . . .,,,...,. . . . . . . . . . . . . ( 907)

Race:

White . ................,,,..,,.,,, . (1,288)

Black . . . . . . . . . . . . . . . . . . . ( 131)

Income:

Less than $5,000 . . . . . . . . . . . . . . . . . . . . ( 63)

$5,00(- $9,999 ( 104)

$10,000 C-$19,999 ::”: ::::::::::::: ( 238)

$20,000 -$29,999 . . . . . . . . . . . . . . . . . . ( 258)

$30,000-$39,999 . . . . . . . . . . . ( 206)

$40,000 -$49,999 . . . . . . . . . . . . . . ( 140)

$50,000-$74,999 ( 118)

$75,000+ . ......::::”::::::::::: :: ( 65)

41

80

77

59

45

45

29

10

44

38

40

48

32

22

37

35

31

40

43

41

59

20

19

39

54

55

71

90

56

61

60

52

68

77

62

64

69

59

56

59

1

—

3

1

●

—

1

—

1

1

1

—

—

1

1

●

—

1

1
CDs?

Question x: (ROPER) In the past twelve months, have you personally taped any music on a tape recorder?

1979* 1988

10-13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1

14-15 ...........::.::.. ::. . . . ~~~~~~~ . . . . . . . . . . . 39.0

16-17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1

18-29 . . . . . . . . 31.9

30-44. . . . . . . . . . . . . . . . . . . . : : : . : ’ ’ : : : : : : ::::..... . . . . . . . . 25.0

45-59 ...,, . . . . . . . 16.4

60+. ..:: ::::::. . . . . . . . . . . . . . . . . . . 4.4

40.8

80.6

78.0

81.9

53,9

41.5

24.0

10,9

● The Roper Organization, A Sfudy on the Tape Recording Practices of the General Public, June 1979

Table 5-3.–Taping in Past 3 Months: 1982-1988

Question x:(YSW) Do you ever tape music from records, prerecorded tapes, or the radio?

Question x: (YSW) How many of these tapes have you made in the last 3 months from records, prerecorded tapes, or the

radio?

1982* 1988

Percent total population14 + . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 28

Percent tapers 14- . . . . . . . . . . . . . . . . . 55 58

‘Yankelovich, Skelly and White, Inc Why Americans Tape: A Survey of Home Audio Taping in the United States, September 1982

Table 5-4.–Past Year Taping Among Current Buyers: 1978-1988

Question 40: In the past year, have you used an audio recorder to tape music from either radio, television, records, tapes, or

CDs?

1978’ 1988

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 41

Current buyers . . . . . . . . . . . . . . . . . . . . . . . . 32 53

● Warner Communications Inc , The PreRacorded Music Market: An Inventory Survey, March 1978
Unweighed Not

base Yes No sure

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30-34, . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Female . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Race:

White . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Place:

City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Suburb . . . . . . . . . . . . . . . . . . . . . . . . . .

Rural . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Region:

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Midwest . . . . . . . . . . . . . . . . . . . . . . . . .

south . . . . . . . . . . . . . . . . . . . . . .

west., ,...., . . . . . . . . . . . .

lncome:

Less than $5,000 . . . . . . . . . . . . . . . .

$5,000-$9,999 . . . . . . . . . . . . . . . . . .

$10,000 -$19,999 . . . . . . . . . . . . . . .

$20,000-$29,999 . . . . . . . . . . . . . . .

$30,000 -$39,999 . . . . . . . . . . . . . . . . .

$40,000-$49,999 . . . . . . . . . . . . . . . . . .

$50,000 -$74,999 . . . . . . . . . . . . . . . .

$75,000+ . . . . . . . . . . . . . . . . . . . . . . . . .

(1,501) 45 54

1

( 57)

( 118)

( 140)

( 173)

( 180)

( 619)

( 197)

72

78

70

49

43

36

15

28

21

30

49

56

63

85

—1—111*

( 594)

( 907)

50

40

49

59

1●

(1,288)

( 131)

44

58

56

42

1●

( 440)

( 680)

( 381)

43

50

38

56

49

61

11*

( 311)

( 370)

( 519)

( 301)

50

41

45

44

49

58

54

55

111●

( 63)

( 104)

( 238)

( 258)

( 206)

( 140)

( 118)

( 65)

37

25

41

48

37

40

48

42

61

75

58

51

62

59

51

56

1—111111
Unweighed Past Past Past A year Not

base week month year or more sure Never

Total: . . . . . . . . . . . . . . . . . . . . . . (1,501)56 16 17

1 55

Age:

10-14 . . . . . . . . . . . . . . . . . . . ( 38)

15-19 .., . . . . . . . . . . . . . . . . . ( 90)

20-24. , . . . . . . . . . . . . ( 90)

25-29, .,, . . . . . . . . . . . . . . . . . ( 82)

30-34 . . .,, ,,, . . . . . . . . ,. . ( 74)

35-64 . . . . . . . . . . . . . . ( 211)

65+.... . . . . . . . ( 26)

13

16

12222

26

1674132

25

35

22

21

17

123

7

11

26

21

23

189

28

22

30

50

57

64

85

142●1

—

1

sex:

Male . . . . . . . . . . . . . . . . . . . . . . ( 295)

Female. , . . . . . . . . . . . . ( 321)

456618

15

21

12

121150

60

Race:

White .,...,.,,,,,. ( 506)

Black . . . . . . . . . . . . . . . . . ( 76)

4868

14

31

18

10

56

42

Income:

Less than $5,000 . . . . . . . . . . ( 24)

$5,000- $9,999 ( 29)

$10,000 -$19,999 :::::::: : ( 29)

$20,000-$29,999 ..., ( 111)

$30,000 -$39,999 .. ...::: : ( 79)

$40,000-$49,999 . ( 55)

$50,000 -$74,999 . ( 54)

$75,000+ ( 26)

Refused””” ( 54)

413432224

2244154

102

19

10

16

17

12

16

13

15

13

10

11

16

23

21

15

27

12

16

212112232

63

75

59

52

63

60

52

58

64
(Base: Past year tapers)

Unweighed Not

base One Two Three Four + sure Mean

Total: ... . . . . . . . . . . . . . . ( 338) 84 10 2 1 3 1.21

Age:

10-14 ....., . . . . . . . . . . . . . . . ( 33)

15-19 . . . . . . . . . . . . . . . . . . . ( 74)

20-24. , . . . . . . . . . . . . . . . . . . ( 46)

25-29 . . . . . . . . . . . . . . . . . . . . . ( 41)

30-34 . . . . . . . . . . . . . . . . . . . . . ( 36)

35-64 ......., . . . . . . . . . . . . ( 95)

65+, . . . . . . . . . . . . . . . . . . . . . ( 10)

86

86

95

85

89

75

81

5

14

3

12

9

12

14

7

—

1—

—

1

2

1

3

2

1.31

1.14

1.09

1.23

1,10

1.30

1.15

—

—

2

10

5

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . ( 155)

Female ..,.,,,. . . .,, ,.,..,, ( 183)

80

88

12

8

3

1

2

1

3

2

1,30

1.13

Race:

White . . . . . . . . . . . . . . . . . . . . . (254)

Black . . . . . . . . . . . . . . . . . . . . ( 60)

87

75

9

14

2

2

2

8

121

1.23

1

1

Table 5-9.–Number of Broadcast Taping Occasions in Past Month: by Age Cohort

Question 43h: During the past month, on how many occasions, in all, have you made audio tapes of music from radio or

television?

Sum Mean Percent

Torah . . . . . . . . . . . . . . . . . . . . (1,501) 712,9170 0.4749

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 57)

15-19 . . . . . . . . . . . . . . . . . . . . . . . . ( 118)

2(-24 . . . . . . . . . . . . . . . . . . . . . . . . . ( 140)

25-29 .............,,,, ,,.,. . ( 173)

30-34 . . . . . . . . . . . . . . . . . . . . ( 180)

35-64 ...........,,,,, . . . . . . . . ( 619)

65+ . . . . . ( 197)

NA . . . . . . . . . . . . . . . . . . . ( 17)

232,1220

217.9340

111.7000

21,1070

12,6790

111,8030

4.8360

0.7360

1.9530

1.6750

0.8138

0.1352

0.0799

0.1922

0.0232

0.0769

32.6

30.6

15.7

3.0

1.8

15.7

0,7

0.1

NA = not applicable
y py

Question 43h: During the past month, on how many occasions, In all, have you made audio tapes of music from radio or

television?

Total Sum Mean Percent

Total: ., ., ., (1,501) 850.3330 0.5665

Age:

10-14, ., . . . . . . . . . . ( 57)

15 1 9 ( 118)

20-24 , ( 140)

25-29. ., ( 173)

30-34 . . ( 180)

3564 :. ( 619)

6 5 + ( 197)

NA . . . . ,, ,, ( 17)

311.7490

227.6360

134.7720

32.1720

12.6790

125.0170

4.8360

1.4720

2.6230

1.7496

09819

02061

0.0799

02149

00232

0,1539

36,7

26.8

15,8

3 8

1.5

14,7

0.6

0.2

NA = not available

Table 5-12.– Recency of Taping From Prerecorded Format

Question 44b: When was the most recent time that you taped music from a record, prerecorded audio cassette or CD?

Unweighed Past Past Past A year Not

base week month year or more sure Never

Total : (1,501) 4 6 18 19 2 50

Age:

10-14 . ( 57)

15 1 9 ( 118)

20-24 ( 140)

25 29 : : : : ( 173)

30-34 ( 180)

3564 .:. .“: :: ( 619)

6 5 + ( 197)

13

12

10

3

2

1

1

10

18

5

5

9

4

1

19

35

30

23

24

14

2

12

6

32

29

27

20

11

4

3

3

2

●

2

1

42

26

21

39

37

58

85

Sex:

Mal e ( 594)

Female : . : : : : : : ( 907)

4

4

7

5

21

16

23

16

2

2

44

56

Race:

White ., (1 ,288)

Black . : ’ : ” : :’:...... ( 131)

3

10

6

7

18

20

20

19

2

3

52

41

Income:

Less than $5,000 . . . . (

$5,000 $9,999 (

$10,000-$19,999 (

$20,000-$29,999 : : : : : : : (

$30,000-$39,999 (

$40,000 $49,999 : : : : : : (

$50,000-$74,999 (

$75,000+ (

17

12

16

18

15

17

26

24

16

12

25

24

26

24

21

14

63)

104)

238)

258)

206)

149)

118)

65)

6

2

3

3

1

1

5

4

2

3

4

5

3

8

7

6

3

1

1

3

5

—

6

56

71

51

49

52

46

41

46
Question 440: How many different tapes did you record onto on that occasion?

(Base: past year tapers)

Unweighed Number of tapes Not

base 1 2 3 4+ sure Mean

Total: . . . . . . . . . . . . . . . . . . . . . . . ( 406) 63 20 7 0 2 1.84

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . ( 24)

15-19 . . . . . . . . . . . . . . . . . . . . . ( 77)

2(-24 . . . . . . . . . . . . . . . . . . . . . ( 58)

25-29 . . . . . . . . . . . . . . . . . . . . . ( 52)

30-34 . . . . . . . . . . . . . . . . . . . . . ( 61)

35-64 . . . . . . . . . . . . . . . . . . . . . ( 127)

65+ . . . . . . . . . . . . . . . . . . . . . . ( 5)

56

65

68

61

70

60

86

24

24

20

20

11

19

14

8

3

6

10

9

8

—

12

7

5

6

9

7

—

2.28

1.94

1.54

1.69

1.72

1.87

1.14

—

—

1

2

1

7

.

Sex:

Male . . . . . . . . . . . . . . . . . . . . ( 198)

Female . . . . . . . . . . . . . . . . . . . . ( 208)

64

63

15

25

10

3

9

6

2

3

1.96

1,71

Race:

White . . . . . . . . . . . . . . . . . . . . . ( 324)

Black . . . . . . . . . . . . . . . . . . . . . ( 55)

64

65

19

20

7

2

7

12

3

1

1.81

2.00

Table 5-17.–Total Tapes Made in the Past Month From Prerecorded Format

Unweighed

base Sum Mean Percent

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (l,50l) 736.4450 0.4906

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . ( 57) 256.0900 2.1547 34.8

15-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 118) 156.1910 1.2005 21,2

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 140) 57.3730 1.2005 7.8

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 173) 41,3860 02651 5.6

30-34 . . . . . . . . . . . . . . . . . . . . . . . . . ( 180) 52.8610 0.3331 7.2

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 619) 166,5680 0.2864 22.6

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . ( 197) 4.5040 0.0216 0.6

NA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 17) 14720 0.1539 0.2

NA = not available

NOTE: Two outliers reporting 10 or more tapes made on Iast taping occasion were coded as 10 tapes made, in this analysis
base & radio only onlv None

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,501) 16 12 11 61

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 57)

15-19 . . . . .,, ,, ...,,.,. . . . . . . . . . . . . ( 118)

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 140)

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 173)

W-34 . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 180)

W-64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 619)

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 197)

32

51

30

17

1581

10

14

14

14

20

122

32

15

11

10595

25

20

45

60

59

71

92

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . . . . ( 594)

Female, ...,,... . . . . . . . . ( 907)

17

16

14910

11

58

64

Race:

White . . . . . . . . . . . . . . . (1,288)

Black . . . . . . . . . . . . . . . ( 131)

15

24

11

13

9

24

65

39

Place:

City ..,,,.. . ( 440)

Suburb .. ....’.. ::.:: . :::”:::.::. ( 680)

Rural . . . . . . . . . . . . . . . . . . . . . . ( 381)

15

19

12

11

12

13

11

10

10

62

59

65

Region:

East . . . . . . . . . . . ( 311)

Midwest . . . . . . . . . ( 370)

south . . . . . . . . . . . . ( 519)

west . . . . . . . ( 301)

17

14

18

15

9

11

13

14

129

11

10

62

66

58

61

income:

Less than $5,000.. . . ( 63)

5,000- $9,999 . . ( 104)

$10,000 -$19,999 . _: ::::::::: ( 238)

$20,000 -$29,999 . . . . . ( 258)

$30,000 -$39,999 . ,. .:: ( 206)

$40,00 -$49,999 . . . . . . . . . . . . . . . . . . ( 140)

$50,000 -$74,999 . . . . . . . . . . . . . . . ( 118)

$75,000+ . . . . . . . . . . . . . . . . . ( 65)

174

13

129

13

15

17

8

14

10

14

10

13

23

16

8

10

10

126

104

10

67

73

67

61

75

64

58

57
fQuestion 10:

Question 11:

portant or not at all important?

During the last 7 days, approximately how much time did you spend listening to music on the radio and television?

Not including music on radio and television, approximately how much time in the last 7 days did you spend listening to music on records, audiotapes and CDs, not including background music in public places (e.g., stores, offices, elevators, bars).

Past year taping

Broadcast Recording

Total only only Both Neither

Importance of music:

Extremel y

Quite . . . . .

Slightly .

Not at all . . . .

. . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . .

Radio listening:

Non e

Less than 1 hr.

1-5 hrs. ...

6-10 hrs .

11-19 hrs .

20 or more hrs.. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . .

.

. .

,.

Recording listening

None . . . . . . . . . . . . . . . . . . . .

Less than 1 hr. . . . . . .

1-5 hrs. . . . . . . .

6-10 hrs. . . . .

11-19 . . . . . . . . . . . . . . .,

20 or more hrs. ., . . . . . . . . . . .

(1,501) (126) (194) (212) (969)

24 35 23 45 16

32 25 34 31 33

34 33 38 21 36

10 7 5 2 14

7 3 8 4 9

4 5 3 1 4

31 27 22 22 35

20 22 28 19 19

11 8 10 12 11

24 34 27 39 18

43 30 20 13 57

3 6 3 3 2

31 42 44 38 26

10 10 12 15 8

5 5 8 12 3

6 5 12 18 2

Table 5-23.-Number of Past Month Tapings From Records, Cassettes or CDs by

Recency of Recording Purchase

Sum Percent Cumulative

Total: ., ., . . . . . . . . . . ., ., ., 738,445

Last purchase of a record, cassette or CD:

Past week . . . . . . . ., ... ., . . . . . ... . . . . . . . . . . . 304,960 41.4 41.4

Past month ... . . . ., . . . . . . . . . . . 108,303 14.7 56.1

Past year ., ., ., . ... . . . . . . . . . . . . . 232,108 315 87.6

A year or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.543 3.1 90.7

Not sure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.957 1.1 91.8

Never ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.574 8.2 100.0
Question 430: Were you taping one or more whole albums or were you taping singles or selections from albums or both?

(Base: made tape in past year)

Unweighed Selections/ Music Televised Not

base Whole singles Both video concert Other sure

Total: ... . . . . . . . . . ( 338) 8 56 15 2 3 13 3

Age:

10-14 ...., . . . . . . . . . . . ( 33) — 58 2 2 – — 17 3

15 19, ... ., . . . . . . . . . ( 74) 6 64 13 13 4

~-24 ., ., . . . . . . . . . . ( 48) 8 58 18 3 6 7

25-29. , . . .,

—

( 41) 13 48 22 8 — 9

30 34 . . . . . . .

.

( 36) 11 46 5 4 4 24 5

35-64 . . . ., ( 95) 13 56 10 2 4 10 5

6 5 + ( 10) 5 47 9 – 25 15 .

Table 6-3 (Abbreviated).– Album Taping: Prerecorded

Question 44d: Were you taping one or more whole LPs, cassettes, albums or CDs?

(Base: Past year tapers)

Unweighed Not

base Yes No sure

Total: ... . . . . ... ( 406)

Age:

10 1 4 ( 24)

15-19 : : : : : : : : : : : : : : : : : ( 77)

20 24 . . . . . . . . . . . . . . . . ( 58)

25-29, . . . . . . . . . . . . . . . ( 52)

W-34 . . . . . . . . . . . . . . . ( 61)

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 127)

65+ . . . . . . . . . . . . . . . . . . . ( 5)

70

84

63

64

76

73

67

59

28 2

16 .

37 .

33 3

20 4

27 —

27 6

41 —

Table 6-5.–Album vs. Selection Taping: Total Last Taping

Question 44k: Were you taping selections from LPs, singles, cassettes, or CDs onto that tape?

Questions 44d: Were you taping one or more whole LPs, cassette albums or CDs?

Whole LPs

Selections Yes No Not sure Total

Yes, . . . . . . . . . . . . . . . . 21 21 ● 43

No . . . . . . . . . . . ,, 48 6 1 55

Not sure ,. . . 1

* 1 2

Total, ,,, . . . . . . . . . . . . . . . . 70 28 2

(N = 406)
borrow it from members or a member of your household, another family member, ● friend or somewhere else?

(Base: Taped whole LP/cassette/CD)

House

Unweighed Own -hold Other

base original member family Friend Other

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 279)

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . . ( 19)

15-19 . . . . . . . . . . . . . . . . . . . . . . . . . . ( 52)

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . ( 37)

25-29, . . . . . . . . . . . . . . . . . . . . . . . . . ( 38)

30-34 . . . . . . . . . . . . . . . . . . . . . . . . . . ( 41)

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . ( 88)

65+. ... ... ... ... ... ... ... ... ..( 3)

57

24

54

59

61

79

61

100

3

1

8

2

1—

5

—

4

2

4

5

10

1

2—

29 2

58 —

32 —

32 —

25 2

12 3

22 6

—

Table 6-12 (Abbreviated).-End User of Copy

Question 45a: Were you making the tape(s) for yourself, ● nether member of your household, or someone else?

(Base: Made tape in past year)

Other

Unweighed household Someone Not

base Yoursetf member else sure

Age

10-14 . . . . . . . . . . . . . . . . . ( 24)

15-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 77)

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 58)

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 52)

30-34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 61)

35--64. . . . . . . . . . . . . . . . . . . . . ~~~~~~[ ( 127)

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 5)

73

84

66

77

76

74

69

80

7

—

7

5

3

9

12

—

19

16

27

17

18

17

18

20

1

—

—

1

2

1
y ypy gyg (p)

(Base: made copy in past year)

(406)

Wanted a tape for automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted music/liked album (unspec.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted to give to friend/acquaintance/co-worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Can edit/choose what selections to hear/put different

selections together/create personal selection of music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted to give to family member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted to protect originals/keep from wearing out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted a tape for Walkman type player . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less expensive than buying the recording/cheaper to copy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Not willing to buy it, . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Needed/wanted it for school/class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Replace an original . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted to be able to play it on a tape player (unspec) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Prefer cassettes/tape format (reason not specified) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Don’t have a record player/CD player, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted a tape for personal stereo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Can record more selections on 1 tape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Can’t buy original/not available/can’t find original . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wanted better quality of sound (unspec) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Don’t like the quality of prerecorded tapes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Don’t like it enough to buy/not that interested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

More convenient than buying it, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Already had a copy/don’t need another copy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Could not afford to buy it . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

To sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

All other mentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Don’t know/not sure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

21

14

6

6

3

3

3

3

2

2

2

1

1

1

1

1

1

1

*

*

●

●

o

10

2
material, if you had wanted?

Unweighed Not

base Yes No sure

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 406) 57 40

4

Age:

10-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 24) 56 44

15-19 ., ., . . . . . . . . . . . . . . . . . . . .

—

( 77) 65 30

2(-24 . . . . . . . . . . . . . . . . . . . . . . . . ( 58) 54 43

3

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 52) 67 29

5

30-34 . . . . . . . . . ( 61) 65 35

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . .

—

( 127) 45 50

5

65* .,.,.....,,,,,,.,,,.,,, ( 5)

3 20 27

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . . . . ( 198) 55 42

3

Female . . . . . . . . . . . . . . . . . . . . . . . . . . ( 208) 59 37

Race:

White . . . . . . . . . . . . . . . . . . . . . . . . . . ( 324)6 404

Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 55) 58 41

2
Queso5coe oog coces, ay, ee pyg p

(Base: could have purchased)

Unweighed Not Not

base Important important sure

You wanted to protect your originals

from damage or wear .

You wanted to be able to play the

recording on a tape playe r

You wanted to get a better quality

soun d

It was less expensive than

purchasing a recordin g

You wanted a longer playing

time. . ., .,

You wanted to create a customized

selection of music . . . .

Buying the prerecorded material

was inconvenient for you .

You already had a copy of the

music in prerecorded form and

didn’t want to buy another . ,

The purchase price of the recording

was higher than you were willing

to pay for that recordin g

(234) 42% 56% 2%

(234) 86 12 2

(234) 42 55 2

(234) 63 34 2

(234) 46 51 3

(234) 57 42 2

(234) 39 58 2

(234) 51 46 2

(234) 41 54 4
(ppy)

Past Past Past

week month year Total

50a.

46a.

49a.

51a.

52a.

53a.

Unweighed base:

Some people make tapes of their own

records, cassettes, and CDS, so that

they can play them in their car, Walkman

or elsewhere. Have you ever made a tape

of a record, cassette, or CD that you owned

mainly for this reason? . . . . . . . . . . . . . . . .

Some people tape selections from

several records, cassettes, or CDs to

create their own customized program

of music on tape, Have you ever made

a tape, mainly for that reason? . . . . . . . . . . .

Some people make tapes of their

own records, cassettes, and CDs, in

order to protect the originals from

damage and keep them from wearing out.

Have you ever made a tape of a record,

cassette, or CD that you owned mainly

for this reason? . . . . . . . . . . . . . . . . . . . . . . . . . . .

Some people make tapes of their friends’

records, cassettes, and CDs so that they

don’t have to buy them. Have you ever

made a tape mainly for that

reason? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Some people make tapes of other peoples’

records, cassettes, and CDs that they

would like to listen to, but probably

would not buy. Have you ever made a

tape mainly for this reason? . . . . . . . . . . . . . . . . .

Some people make tapes of recordings

because they think they can get better

quality sound from a tape they make

compared to one they could buy.

Have you ever made a tape mainly

for this reason? . . . . . . . . . . . ...

( 38) ( 66) (240) (343)

78%

82

7996 81%

82 61 67

44

30

33

50

48

46

46

41

34

46

41

36

13 26 16 17
Question 451: If you had not been able to make that tape, do you think that you would have purchased (that recording/another

copy of that recording) or not?

Unweighed Would have Would Not

base purchased not sure

Total.’ ., ... . . . . . . . . . . . . . . . . . . . . ., .

Age:

10-14 ......., ., . . . . . . . . .

15-19 . . . . . . . . . . . .

20-24 . . . . . . . . . . . . . . . .

25-29, . . . . . . . . . . . . . . . ., .

30-34. . . . . . . . . . . . . . . . . . . . . . . ,,

35-64,,. . . . . . . . . . . . . . . .

65+ . . . . . . . . . . . . . . . . . . . . . . ,...,,

Sex:

Male . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Female . . . . . . . . . . . . . . . . . . . . . . . . . .

Race

White . . . . . . . . . . . . . . . . . . . . . . . . .,,.,

Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income:

Less than $5,000,..,,. ,

$5,000- $9,999 . . . . . . . . . . .

$10,OO-$19,999 .

$20,000-$29,999 . . . . . . . . .

$30,00(-$39,999 . . . . . . . .

$40,000 -$49,999 . . . . . . . . . . . . . . .

$50,00-$74,999

$75,000+ .. .....:::::::::: :: ’:::.,

( 234)

( 12)

( 53)

( 33)

( 36)

( 37)

( 60)

( 3)

( 108)

( 126)

( 182)

( 34)

( 10)

( 7)

( 31)

( 45)

( 22)

( 26)

( 29)

( 10)

49

84

61

54

33

41

29

63

50

48

48

47

26

18

40

51

43

26

34

47

47

16

36

37

67

58

63

37

47

47

49

45

66

74

60

47

49

70

60

53

4

4

9

8

3

5

3

8

8

8

2

8

3

6

—

Table 8-3.-Would Purchase

Question 45a: Were you making the tape(s) for yourself, another member of your household, or someone else?

Question 451: if you had not been able to make that tape, do you think that you wouid have purchased (that recording/another

copy of that recording) or not?

Not

Making tape for: Yes No sure

Yourself . . . . . . . . . . . . . . . . . . . . . . . . . . . (164) 53 44 3

Household member . . . . . . . . . . . . . .,., ( 25) 32 57 11

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 45) 42 54 4
ygg, gyp, 

place of other recordings you have purchased?

Unweighed In In Not

base addition place sure

Total ., . . . . . . ., . . . . . . . . . . . . . . . .

Age:

10-14, . . . . . . . . . . . . . . . . . . . . . . . . . .

15-19 .., . . . . . . . . . . . . . . . . . . . . . . .

~-24 ... . . . . . . . . . . . . . . . . . . . . . .

25-29 ...., . . . . . . . . . . . . . . . . . . . . . . . .

30-34......,,., . . . . . . . . . . . . . . . . . . .

35-64 . . . . . . . . . . . . . . . . . . . . . . .

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sex:

Male.. ., . . . . . . . . ., ., . . . . . . . . .

Female. , . . . . . . . . . . . . . . . . . . . .

Race:

White . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Black . . . . . . . . . . . . . . . . . . . . . . . . .

( 104)

( 10)

( 28)

( 18)

( 12)

( 15)

( 19)

( 2)

( 51)

( 53)

( 81)

( 14)

77

62

82

88

75

83

72

00

84

70

73

98

19

31

18

6

25

17

18

—

11

29

23

2

4

7

—

6

—

10

—

5

2

5

—

Table 8-11.–Heard Before Buying on...

Question 36(l): Before buying it, had you heard the recording or the performer on: radio or television, live concerts, records,

prerecorded cassettes or CDs,tapesmadebyyouorothers?

Total Record Cassette CD

(897) (170) (611) (98)

Radio or TV . . . . . . . . . . . . . . . . . . . . . . 79 83 79 78

Live concert . . . . . . . . . . . . . . . . . . . . . . . 21 18 22 24

Prerecorded records, cassettes, CDs . . . . 53 53 52 64

Tapes made by you or others . . . . . . . . . . . 24 30 22 27

Table 8-13.-Taping Expectations for Most Recent Purchase

Question 34b(1): At the time you bought this (record/cassette/CD) did you expect to tape from it?

Total Record Cassette CD

(894) (167) (620) (104)

Yes, expected to tape . . . . . . . . . . . . . . . . . 14 35 8 16

No, did not expect to . . . . . . . . . . . . 81 63 91 82

Not sure . . . . . . . . . . . . . . 1 2 1 1
Q

yp()

(Base: past year purchasers)

Unweighed Not

base Yes No sure

Total: . . . . . . . . . . . . . . . . . ( 897) 11 87 1

Age:

10-14, ,,,.... . . . ( 33)

15-19 .,,,.,.., . . . . . . . . . . . . ( 102)

2(-24 .,.,,,,,,,.,,,.. .,,,, , . ( 108)

25-29 ....,,,,..,.,,,, .,,,.. . ( 127)

3034. . . . . ., .,,,. ( 124)

3564. . ( 348)

65+ ,,,,. . . ( 51)

28

11

16

9

9

8

2

72

85

81

89

90

90

94

—

2—

1—

Table 9-1.–Voice Recording in Past Year

Question 41a: in the past year, have you used an audio recorder to tape anythingelse (other than music from either radio, television, records, tapes, or CDs) at home, including voices, answering machine messages, and dictatlon?

Unweighed Not

base Yes No sure

Total: ..,. ,, .,.,..,, ,, (1,501) 32 67 *

Age:

10-14. .

15-19 .

20 24

25 29. .:._::: :::.

30-34., ,.,,,, ,. ...::

35 64.. ,,,. .,

65+ .

( 57)

( 118)

( 140)

( 173)

( 180)

( 619)

( 197)

49

53

42

36

36

29

9

51

46

57

64

64

70

91

—

1

1

1

Sex:

Male . . . . .,, ,, ..,...., ....,,,

Female . . . . . . . . . . . .

( 594)

( 907)

33

32

67

68

*

●

Race:

White . . . . . . . . . . . . . . . . . .

Black . . .

(1,288)

( 131)

33

34

67

66

●
When was the last time you made a recording of (this/any of these) type?

Unweighed Past Past Past Year Not

base week month year or more sure Never

Total: . . . . . . . . . . . . . . . . . . . . . . . (1,501) 9 7 13 2 1 68

Age:

10-14 . . . . . . . . . . . . . . . . . . ., ( 57)

15-19 ......., . . . . . . . . . . . . . ( 118)

20-24 . . . . . . . . . . . . . . . . . . . . . ( 140)

25-29 ..., . . . . . . . . . . . . . . . . . ( 173)

30-34 . . . . . . . . . . . . . . . . . . . . . ( 180)

35-64 . . . . . . . . . . . . . . . . . . . . . ( 619)

65+ . . . . . . . . . . . . . . . . . . . . . . ( 197)

10

11

16

14

7

9

2

10

14

10

3

11

6

2

17

25

15

12

13

13

2

7

5

1

3

3

1

1

2

—

—

2

1

1

1

54

46

58

66

64

72

93

sex:

Male. . . . . . . . . . . . . . . . . . ( 594)

. . . . . . . . . . . . . . . . . . . . ( 907)

10

8

7

7

11

14

2

2

1

1

69

68

Race:

White . . . . . . . . . . . . . . . . . . . . . (1,288)

Black . . . . . . . . . . . . . . . . . . . . ( 131)

13

13

2

2

9

6

6

12

1 68

66

Income:

Less than $5,000 . . . . . . . . . . . ( 57)

$5,000- $9,999 . . . . . . . ( 104)

$10,000 -$19,999 ( 238)

$20,000-$29,999 :::::::::: ( 258)

$30,000-$39,000 . . . . . . . . . . ( 206)

$40,000-$49,999 . . . . . . . . . . ( 140)

$50,000-$74,999 ( 118)

$75,000-$99,999 :::::::::: ( 37)

$100,000 or more . . . . . . . . . . ( 28)

Refused . . . . . . . . . . . . . . ( 173)

5

6

3

9

10

13

11

30

12

10

7

6

9

13

11

19

14

12

6

9

83

83

79

71

73

57

62

55

67

75

2

3

7

6

5

7

12

1

11

2

4

1

1

1

1

3

1

3

—

2

—

—

1

1

*

1

1—

5

1

TabIe9-4. - Number of Voice Taping Occesionsin Past Month

Question 42: During the past month,on how many occasions, in all,haveyou made an audiorecording of any of these kinds?

Unweighed Not

base None 1-2 3-4 5-1o 11-30 31+ sure

Total . . . . . . . . . . . . . . . (1,501) 84 5 2 2 4 1 1

Age:

10-14 . . . . . . . . . . . . . . . . . ( 57)

15-19 . . . .,, .,, ..,..... ( 118)

20-24, . . . . . . . . . . . . . . . . ( 140)

25-29 . . . . . . . . . . . . . . . . . ( 173)

30-34 . . . . . . . . . . . . . . . . . ( 180)

35-64 . . . . . . . . . . . . . . . . . ( 619)

65+ . . . . . . . . . . . . . . . . . . ( 197)

80

76

74

84

82

86

96

7

6

7

4

7

5

2

2

9

2

2

4

2

—

4

3

8

5

4

4

1

6

2

1

●

●

1

4

8

2

2

2

1

1

1

2

*

1

*

1

●
g

base Percent

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,501) 73

Age:

10-14 ,,, ,,, ,,,,,,, ,., . . . . . . . . . . . . . . . . . . . . . . . . . . ( 57) 36

15-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 118) 46

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 140) 73

25-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 173) 94

30-34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 180) 85

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 619) 85

65+ .,.. .,..... ,,, ,.,,... . . . . . . . . . . . . . . . . . . . . . . . . . ( 197) 88

Table 10-6.-Number of Made Tapes in lnventory by Dual Cassettes

Question 29f: Of the audio tapes you own, how many are audio tapes that you have made?

Dual cassettes

Unweighed Not Not

base Yes No asked sure

Number of audio tapes

None ,, ., . .,, ,,, ,., .,,., . (611) 24 57 14 5

1-10, ,,,., . . . . . . . . . . . . . . . . . . (432) 51 44 3 2

11-25 ...,.... . (162) 50 47 2 1

26-50 . . . . . . . . . . . . . . . . . . . . . . . . . . (101) 48 49 2 1

51 -100. . ( 42) 42 58 — —

100 + ( 26) 65 30 — 4

Not sure , . ( 40) 32 39 18 10
(Base: have dual cassette)

Fast dubbing

Unweighed Not

base Yes No sure

Number of made tapes:

None . . . . . . . . . . . . . . . . . . . . . . . . . . (142) 59 24 18

1-10 ......., . . . . . . . . . . . . . . . . (232) 62 25 13

11-25 ...., ., . . . . . . . . . . . ( 82) 76 21 4

%-50 . . . . . . . . . . . . . . . . . . . . . . . ( 50) 71 20 9

51-100 ......., . . . . . . . . . . . . ( 18) 72 18 10

100+ . . . . . . . . . . . . . . . . . . . . . . ( 17) 84 2 14

Not sure . . . . . . . ., . . . ( 14) 58 31 11

Table 11-1. –Familiarity With Copyright

Question 55: How familiar would you say that you are with copyright laws and their application to home audiotaping? Would

you say that you are–extremely familiar, quite familiar, slightly familiar, or not at all familiar?

Past year music taping

Total None Broadcast Prerecorded Both

How familiar . . . . . . . . . . . . . . . (1501) (969) (126) (194) (212)

Extremely . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 6 5 8

Quite . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 15 17 16 24

Slightly . . . . . . . . . . . . . . 42 41 49 46 43

Not at all . . . . . . . . . . . . . . . . . . . . . . . 34 38 28 31 25

Not sure ,.. . . . . . . . . . . . . . . 1 1 1 1 1
Question 54:I am going to read you some things that people sometimes do. For each, ld like to know how acceptable you would

feel this action to be. Using a scale of 1 to 7, where 7 means that the action is perfectly acceptable to do in your

opinion and 1 means that the action is not at all acceptable to do, how would you rata the acceptability to you of

(READ ITEM) or don’t you have an opinion on that?

Not at all

acceptable

to do

Perfectly

acceptable No

to do opinion

a

b

c.

d

e.

Making a taped

copy for your own

use of a record,

cassette, or CD that

you own .,

Making a taped

copy to give to

a friend of a record,

cassette, or CD that

you own ., .,

Mailing a taped

copy to sell of a

record, cassette,

or CD that you

own . . . . . . . .

Making a taped

copy for your own

use of a complete

record, cassette,

or CD that you

borrowe d

Making a taped

copy for your own

use of selections

from several records,

cassettes, or CDs that

you borrowe d

1 2 3

7 2

13 5

67 6 3

15 5

13 2 6

4

5

7

3

7

7

5 6 7 8

10

12

5

14

8 57 9

11 40 8

5 8

10 38 8

13 11 40 8

Unweighted base= 1,501
Question 54: I am going to read you some things that people sometimes do. For each, Id like to know how acceptable you would

feel this action to be. Using a scale of 1 to 7, where 7 means that the action is perfectly acceptable to do in your

opinion a nd 1 means that the actioniIs not at all acceptable to do, how would you rate the acceptability to you of

(READ ITEM) or don’t you have an opinion on that?

Past year music taping

(mean score)

Radio Prerecorded Radio and Signif -

None only only prerecorded icance

a.

b.

c.

Making a taped

copy for your own

use of a record,

cassette, or CD

that you own . . . . . . .

Making a taped

copy to give to a

friend of a record,

cassette, or CD

that you own . . . . . .

Making a taped

copy to se// of

a record, cassette,

or CD that you

own . . .

d. Making a taped

e.

—

copy for your own

use of a complete

record, cassette,

or CD that you

borrowed . . . . . . . . .

Making a taped

copy for your own

use of selections

from several records,

cassettes, or CDs that

you borrowed . . . . . .

. .

. . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . .

(850) (121) (190) (208)

5.6

4.8

1.6

4.6

6.1

5.4

6.4 6.5

5.4 5.8

2.1 2.0 2.6

5.2 5.5 5.8

*

●

●

4.8 5.4 5.5 6.1 ●

● Difference of means between Past Year Taper and No Past Year Taper (none) is statistically significant at the O 05 level with two-tailed t–test.
7, where 7 means perfectly fair and 1 means not at all fair, how fair do you consider (ITEM) or don’t you have an

opinion on that?

(Base: 17 years or older)

Not at

all fair

a.

b.

c.

4

1 2 3

Present practices

of home taping

from records,

prerecorded

audiocassettes, and

CDs are to the

recording industry . . 17 9

Present practices of

home taping from

records, prerecorded audiocassettes,

and CDs are to

song writers and

performers ., ., . , 17 5 8

Present practices of

home taping from

records, audiocassettes,

and CDs are to the

average consumer . . 9 3 6

4

9

10

10

Perfectly Not

fair sure

5 6 7 8

13 7 19 23

13 6 19 22

16 8 26 23

Unweighted base= 1,366
fair you think each of the following suggestions would be or dont you have an opinion?

(Base: 17 years or older)

Not at

all fair

a.

b

c.

d

e.

1 2 3

New audio recorders

should be built so they

can’t copy commercial

recordings . . . . . . . . 42 6

Audio recordings

should be made so they

can’t be copied . . . . . . . 41 7

A fee should be charged

on audio recorders and

paid to copyright holders

to compensate them for

home taping ., 42 8

A fee should be charged

on blank audiotapes and

paid to copyright holders

to compensate them for

home taping ., . . . . . . 48 6 5

Current home taping

8

7

7

practices should be

left unchanged . . . . . . . . 7 1 4

4

6

6

6

7

6

Perfectly Not

fai r sure

5 6 7 8

5 3

6 4

14

17

15

12

7 3 11 16

6 3 8 16

10 7 46 19

Unweighted base: 1,386
Queso5ousg e sae scae ug o, eag oaaa, o , eag peecy a, d e o oo

fair you think each of the following suggestions would be or don’t you have an opinion?

Past year music taping

(mean score)

Radio Prerecorded Radio and SignifNone only only prerecorded icance

a. New audio recorders

should be built so they

can’t copy commercial

recordings . . . .,

b Audio recordings should

be made so they can’t

be copied ., . . . . .

c A fee should be charged

on audio recorders and

paid to copyright holders

to compensate them for

home taping . . . .

d. A fee should be charged

on blank audiotapes and

paid to copyright holders

to compensate them for

home taping . . . . . . . . . .

e Current home taping

practices should be

left unchanged ... ., .

(759) (92) (166) (154)

3,2 2.8

3.5 3.0

2.2

2.5

2 2

2 2

3.0 2.4 2.3 2,4

2.6 2.2 2.4 2 2 N.S.

5.4 6.1 6.0 61 *

● Difference of means between Past Year Taper and No Past Year Taper (None) IS statistically significant at the O 05 level with two-tailed t-test

N S = not sure
program that you recorded from IV, ● videotape that you copied, or a videotape someone made for you?

(Base: Past year acquisition)

Prerecorded Program Tape Video Never

purchased by recorded copied by camera acquired Not

Self Other from IV Self Other tape tape sure

Total: . . . . . . . . . . . . . . . . . . . . . . .

Age:

17-19 . . . . . . . . . . . . . . . . . . . . .

20-24 . . . . . . . . . . . . . . . . . . . . .

25-29 . . . . . . . . . . . . . . . . . . . . .

30-34 . . . . . . . . . . . . . . . . . . . . .

35-64 . . . . . . . . . . . . . . . . . . . . .

65+ . . . . . . . . . . . ., . . . . . . . .

P/ace:

city . . . . . . . . . . . . . . . . . . . .

Suburb . . . . . . . . . . . . . . . . . .

Rural . . . . . . . . . . . . . . . . . . . .

Region:

East . . . . . . . . . . . . . . . . . . . . . .

Midwest . . . . . . . . . . . . . . . . . . .

south . . . . . . . . . . . . . . . . . . . . .

west . . . . . . . . . . . . . . . . . . . . .

Income:

Less than $5,000 . . . . . . . . . . . .

$5,000- $9,999 . . . . . . . . . .

$10,000-$19,999 . . . . . . . . .

$20,000-$29,999 ~ . . . . . . .

(717)

( 37)

( 84)

( 91)

(1 18)

(351)

( 31)

(210)

(341)

(166)

(152)

(166)

(234)

(165)

( 22)

( 27)

( 92)

(132)

23 4 54 2 10 3 2 2

22

21

16

27

24

15

3

6

3

2

3

4

46

53

64

53

54

52

3

5

2

5

1

24

13

11

5

7

24

1 2

3

1

1

1

1

—

.

3

6

4

4

●

5 — —

20

23

25

3

5

2

57

55

49

8

9

15

3

4

1

6

—

3

2

1

2

1

3

3

21

23

24

21

3

2

4

6

55

55

52

58

2

5

1

2

10

8

14

5

3

4

3

3

6

1

●

—

2

2

3 1

16

43

30

21

21

21

26

19

5

—

●

3

3

7

2

7

53

47

52

49

56

56

55

54

11 5

10

9

12

12

11

8

7

— 11 —

—

3

4

4

1

4

2

3

5

11

—

5

5

—

1

3

$30,000-$39,999 . . . . . . . . . . . . . (130) 2

$40,000 -$49,999 . . . . . . . ( 93)

$50,000-$74,999 . . . . . . . . . . ( 89)

$75,000+ . . . . . . . . . . . . . . . . . ( 46)

—

2

—

2

—

2

—

1 —
Question 5d: Did you make that tape to keep or to use only temporarily?

Unweighed Keep Keep Not

base permanently temporarily sure

Total: . . . . . . . . . . . . . . . . .

Age:

17-19, . . . . . . . . . .,

2(-24 ... ., ...

25-29 . . . . . . . . . . . . . .

30-34 . . . . . . . . . . . . . .

35-64 . . . . . . . . . . . . . . . .

65+ ,., . . . . . . . . . . . ,. ,,,

Place:

city

Suburb ”:”:::::: :.::::..:::::.:::” :

Rural . .....,,,.,.,.,,,,,. ,, . . . .

Region

East . . . . . . . . . . . . . . . . . . . .

Midwest . . . . . . . . . . ..,., .

south . . . . . . . . .

West .........,,., , ....:”:::::’::

Income:

Less than $5,000.., . . . . .

$5,000-$9,999 . . .

$10,000-$19,999 . . . . . . .

$20,000-$29,999 . . .

$30,000-$39,999 . .

$40,00(-$49,999 : : : . : . : : .:.::....

$50,00(-$74,99 9

$75,000- . . . . . . ’::::”:.,

( 388) 35 62 3

( 16) 52 4a —

( 44) 39 58 3

( 55) 38 61 1

( 68) 42 55 4

( 189) 30 67 3

( 15) 41 59 —

( 121) 38 59 3

( 186) 36 62 2

( 81) 31 64 5

( 88) 36 60 4

( 94) 28 69 4

( 121) 35 62 3

( 85) 44 56 —

( 11)

( 15)

( 48)

( 67)

( 74)

( 53)

( 49)

( 23)

58

45

34

38

43

28

26

25

42

55

66

60

57

65

63

75

—

2

1

6

11
Qpgyg

Question 5d: Did you make that tape to keep or to use only temporarily?

To To use Not

keep temporarily sure

Movie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Soaps/soap opera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Comedy series/sit-com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dramatic series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mini-series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sports/sporting events . . . . . . . . . . .

Cartoons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other children’s programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Daily/nightly/weekend news . . . . . . . . . . ,. .

News specials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Documentaries (unspecified) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current events programs . . . . . . ..., . . . . . . . . . . . . . . . . . . . . . . . . .

Talk shows . . . . . . . . . . . .

Educational programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Science programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Home repair/car repair/how to . . . . . . . . . . . . . . . . . . . . . . . . . .

Concert/music video/music special . . . . . . . . . . . . . . . . . . . . . .

Other variety/entertainment programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other specials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

All other, ,,..,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Don’t know/not sure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44 51 4

3

21

27

52

97

79

73

39

—

9

18 80 1

88

32

12

68 —

100

71

45

100

—

29

55

—

—

21 79

62

24

100

38

51

.

—

24

—

80

62

20

38

—

—

100 . —

40 60

— 78 22
Question 6a: Not counting recordings made from television or home videocameras, have you ever copied a videotape

(prerecorded or home recorded) either for yourself or for someone else?

(Base: past year tape acquisition)

Unweighed Not

base Yes No sure

Total: . . . . . ., ., ., . . . .

Age:

17-19 . . . ., ., . . . . . . . .

20-24 . : : ... .,

25-29 . . . . . . . . . . . . . .

3(-34, ., .

3564 .,.,,,,.,,.,,,,,,

65+ . . . . . . . . . . . . ,,,,...

Race:

White .,, .,.. ,

Black ..,., ,,.. ., . : : : ’::::’.:’

Sex:

Mal e

Female ,. . .....::::::.”

Income:

Less than $5,000 .,,,... . . . . . . . . .

$5,000-$9,999 . . . .

$10,000-$19,999 . .

$20,000-$29,999 . . . . .

$30,00-$39,999

$40,000-$49,999 : :, :’:.:.:.:

$50,00(-$74,999 . . . . . . . . . . . .

$75,0004 . .

(693)

( 35)

( 82)

( 90)

(115)

(337)

( 30)

(613)

( 48)

(278)

(415)

( 20)

( 27)

( 87)

(127)

(127)

( 92)

( 88)

( 44)

20

18

24

22

25

18

6

19

32

23

17

16

3

19

20

22

24

20

21

80

82

76

78

73

81

94

81

68

77

82

84

97

81

80

78

76

79

79

●

—

1

1

1

—

1

1
yg, coud you ae pucased aopeecoded ape, you ad aed

(Base: copied within past year)

Unweighed Not

base Yes No sure

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . (93)

Age:

17-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 3)

20-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)

25-29 ....., . . . . . . . . . . . . . . . . . . . . . . . (14)

30-34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)

35-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)

65+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 2)

Place:

city . . . . . . . . . . . . . . . . . . . . . . . . (26)

Suburb . . . . . . . . . . . . . . . . . . . . . . . (44)

Rural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)

Region:

East . . . . . . . . . . . . . . . . . . . . . . . . . . (23)

Midwest . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)

south . . . . . . . . . . . . . . . . . . (22)

west . . . . . . . . . . . . . . . . . . . . . . (21)

35

—

45

52

31

27

67

37

42

15

30

41

45

17

57

76

52

48

61

61

33

59

55

58

62

4a

46

77

8

24

4

—

8

12

—

4

3

27

8

11

8

6

Table 12-21.–Ever Copied Prerecorded Video Tape: Music Tapers

Question 6A: Not counting recordings made from television or home videocameras, have you ever copied a videotape

(prerecorded or home recorded) either for yourself or for someone else?

(Base: acquired tape in past year)

Not

base Yes No sure

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (693) 20 80 ●

No music taping

in past year . . . . . . . . . . . . . . (407) 12 88 *

Taping from radio

only . . . . . . . . . . . . . . . . . . . . . ( 62) 16 84 —

Taping from records/

tapes/CDs only . . . . . . . . . . . . . . (114) 30 88 2

Taping from both

broadcast & prerecorded formats . . . . . . . . . . . . . . . . . . . (110) 39 80 1
ppyp, pppy,

a program that you recorded from IV, a videotape that you copied, or a videotape someone made for you?

(Base: acquired tape in past year)

Prerecorded Program Tape Tape

purchased by recorded copied by copied by

self from TV self other

Total . . . . . . . . . . . . . . . . . . . . . .

No music taping

in past year . . . . . .

Taping from radio

only . . . . . . . . . . . . . . .

Taping from records/

tapes/CDs only . . . . . .

Taping from both

broadcast &

prerecorded

formats ., . . . . . . . . . . . . . . . . .

Base:

(717) 23 54 2 10

(

(

(

22) 27 49 2 10

65) 18 68 — 4

16) 16 60 3 8

(1 14) 18 59 4 14
Contractor Documents: Volume I

Schulman, Ronca, and Bucuvalas, Inc.

— Survey of Home Taping and Copying: Final Report, Vol. 1: Executive Summary,

Feb. 10, 1989.

— Survey of Home Taping and Copying: Final Report, Vol. 2: Detailed Findings on

Home Audio-taping, Feb. 9, 1989.

— A Supplementary Report on Home Videocassette Copying and Taping, Feb. 16,

1989.

Contractor Documents: Volume II

William R. Johnson

Estimating the Effect of Copying on the Demand for Original Creative Works,

i&r. 3, 1989.

Michael L. Katz

— Home Copying and Its Economic Effects: An Approach for Analyzing the Home

Copying Survey, Mar. 9, 1989.

Fred L. Mannering

— Consumer Welfare and Audio Home-Copying Restrictions: An Empirical Assessment, Feb. 13, 1989.

NOTE: Copies are available from the National Technical Information Service,

5285 Port Royal Road, Springfield, VA 22161-0001. Telephone: (703)

487-4650.

293