SUMMARY OF COPYRIGHT OFFICE VIEWS Page 6 The Copyright Office endorses the Mathias Amendment No. 1333 to the DeConcini Bill, S. 1758. Specifically, if the Copyright Act of 1976 is to be changed prospectively to alter the result of the Betamax case, the Office supports legislation that would compensate authors and copyright owners for home video and audio taping of their works. The Office also supports the portion of the Mathias Amendment (SEC. 5) which would accord a commercial lending right to motion pictures (and audiovisual works in general) and sound recordings. A. Brief Comparison of S. 1758 and the Mathias Amendment The DeConcini Bill, S.1758, would add a new Section 119 to the Copyright Act exempting from any copyright liability uncompensated off-air videotaping for private use. It would exempt such videotaping in terms so broad as to permit noncommercial tape-to-tape duplication, tape swapping, and the like. The Copyright Office believes this exemption would constitute a serious erosion of the legitimate rights of copyright owners. The Office opposes any exemption for home taping without compensation for copyright owners. As in the DeConcini bill, the Mathias Amendment also would exempt off-air home videotaping for private use, but in addition it offers a workable means of remunerating copyright owners, without impinging upon home privacy or ownership of home recorders. Under the compulsory license Page 7 mechanism of the Amendment, manufacturers and importers who distribute hardware or blank tape would pay a royalty, at rates set by the Copyright Royalty Tribunal, which would then distribute the money to copyright owners. The Copyright Office prefers the market and private collecting societies/over government-administered systems. In this case, the compulsory license concept is accepted by copyright owners as at least an initial or transitional step for accommodating their interests and the interests of purchasers of videocassette recorders (VCR's) The Copyright Office supports the principle of the Mathias Amendment on the same basis. The Mathias Amendment also exempts home audio taping off-air for private use. Unlike the video portion of the Amendment, the audio portion also exempts home duplication from a lawful copy into the same or a different format e.g., disc-to-tape, or tape-to-tape. The compulsory license mechanism is intended to compensate copyright owners for both forms of audio taping. The Copyright Office supports compensation for copyright owners for the home audio taping provided in the Amendment. Key questions under the Mathias Amendment concern the amount of the various royalty rates. The bill mandates the Tribunal to set "fair compensation," and the Tribunal's application of that standard will, of course, be subject to judicial review. The available data regarding similar foreign systems, however, suggest that the fees would be affordable. In West Germany, the total amount collected in 1980 through a surcharge on 4. References to collective societies are used throughout this paper. A collective society is a private organization which, on behalf of its members, licenses their copyrighted works, collects royalties, and distributes the royalties to members. In the United States, for example, ASCAP, BMI and SESAC are collecting societies. Page 8 audio hardware was $15,000,000— a one-time charge of $1.21 per machine.5/ In Austria, the surcharge on blank tape amounts to approximately 5 cents per hour tape.6/ B. The Historical Context of the 1976 Copyright Act The principles underlying the 1976 Copyright Act should be considered in assessing proposals, like those now before the Congress, to revise that statute. Among the relevant principles are: + the statute accords special protection to audiovisual works; + the exemptions for uncompensated use of copyrighted works is especially restricted in the case of audiovisual works; + the 1975 Senate Report specifically negates the users.7 5. BILLBOARD, May 23, 1981, at 6. 6. BILLBOARD, Feb. 6, 1982, at 1. 7. S. Rep. No. 94-473, 94th Cong., 1st Sess. (1975) at 66. The debate is bootless and sterile about Page 9 (1) whether the Sound Recording Act of 1971 included a home audio taping exemption (2) whether any such exemption was imported sub silentio into the 1976 Revision and (3) whether any such imported exemption was extended to home video taping. The Congress here legislates for the future, on the basis of present knowledge of present reality. C. Economic Impact of Home Taping Ownership of home taping equipment, audio and video, is growing rapidly. So also are sales of blank tapes for use with the machines. In the case of home videotaping, the parties dispute - on the basis of conflicting evidence - how much home taping is done for time-shifting and how much for "librarying." By any calculation, however, substantial librarying is occurring; and, it is precisely such librarying which most threatens copyright owners' markets. In the case of audio taping, no one seriously denies that nearly all home reproduction is done for "librarying," including even "customizing" - i.e., creating new anthologies of individual performances from various sources. Thus, nearly all audio taping from transmissions tends strongly to pre-empt the copyright owners' markets, or displace their products from those markets. Page 10 The motion picture and television program production industries are facing rapidly escalating costs. Increasingly, they must look to subsidiary distribution markets as the principal means for recouping their investments and making profits which fuel the creation of new works. Many of the most attractive subsidiary markets are recent outgrowths of new technology. Thus, today, subsequent markets after first theatrical release follow a careful sequence: the sale and rental of videocassettes to the public, cable licensing, network showings, and television syndication. The expanding ownership of VCR's and the widening practice of home taping menaces the newest of these subsidiary markets -the sale and rental of videocassettes. The Mathias Amendment allows home taping and provides for reasonable compensation to to copyright owners by means of a royalty on VCR's and blank tapes. By an automatic mechanism within the system for collecting the royalty, the Mathias Amendment keys the royalty to the principal harmful use - librarying. D. International Implications of Home Taping Despite the decline of numerous American industries in relation to foreign competition, the United States has retained its pre-eminence in the field of motion picture and television production. We are the world's leading exporter of motion pictures. Revenues from licensing U.S. motion pictures abroad account for about 50 percent of the recovery of production costs of U.S. films. Those revenues are an important component of the American balance of payments and promise to become even more so. |