1981 ESTIMATE OF LOSS DUE TO HOME TAPING: EXECUTIVE SUMMARY A recent Warner Communications Inc. (WCI) report on home taping showed that in 1980 the market value of home taped music and other professional entertainment exceeded $2.85 billion. Further, the report concluded that, were home taping not possible, tapers would have spent at least an additional $600 million on prerecorded product. The present report uses the tapers' own perspective to develop an additional measure of the extent to which home taping replaces the purchase of prerecorded product. Sample As part of its ongoing panel research, WCI conducts an annual "Home Entertainment Survey." This survey was included in the November 1981 diary, which was mailed to a select panel of U.S. households. The panel is maintained by Mail Diary Panel, Cranford, New Jersey. The survey was completed by 3,264 respondents age 10 and older. Replacement Questions All respondents were asked whether they had taped any music or professional entertainment in the past 12 months. Those responding "yes" then indicated whether they would have purchased the last album and/or selection they taped if they could not have made a taped copy. Key Findings - 40% of those taping complete albums report they would have bought the album had they been unable to tape it. 35% of those taping selections report they would have purchased the selection or the album containing it had they been unable to tape it. Other Findings - There is not one replacement value; tapers' reports of their likelihood of buying had they been unable to tape vary greatly depending upon their demographic characteristics and various aspects of their taping behavior. Thus, the overall replacement values given above represent weighted averages across all possible sources (e.g., broadcast performances, own or borrowed records), reasons for taping, and types of music taped. Note The above replacement values are based on mail panel respondents' answers to hypothetical questions. The report not only considers the limitations of using a mail panel and the difficulties involved in asking respondents to make hypothetical judgments, but it also describes how we have attempted to resolve these problems. Conclusion - Despite the above limitations, we believe that the data obtained in the present study provide reasonable and reliable estimates of replacement from the tapers' own perspectives. More specifically, the tapers themselves report that 4 out of every 10 taped albums and 3.5 out of every 10 taped selections replace purchases of prerecorded product. 1981 ESTIMATE OF LOSS DUE TO HOME TAPING: Although the The recent WCI report on home taping (see M. Fishbein, S. Middlestadt and M. Kapp, "A Consumer Survey: Home Taping" WCI, March 1982) provided evidence that in 1980 the market value of home taped music and other professional entertainment exceeded $2.85 billion. report recognized that every album or selection that is copied is not a "lost sale," it took the position that "[a]ll copying infringes upon the lawful and legitimate rights of the copyright owners. More specifically, the report pointed out that, "[e]very time a complete album or selection is taped, the taper is reproducing a copywritten work in its entirety without providing fair and equitable compensation to the copyright owners." Moreover, the report clearly indicated that taping replaces sales of prerecorded product. For example, when asked to give their reasons for taping, 45% of the current music tapers reported they had made at least one recording so they "didn't have to buy" the prerecorded product. Not only was this the most frequent reason given, but 25% said this was the reason they taped most often. The report further pointed out that consumers spent over $600 million on blank tapes to bring this $2.85 billion worth of music into their homes. It was argued 2 that this $600 million represents the minimal additional amount that would have been spent on prerecorded product had home taping not been possible. This argument is based on the finding that the more people feel music is important to them, the more they value "hearing what they want, when they want, without commercial interruption." That is, the more one views music as important, the more one is motivated to personally own copies of recorded music. It seems reasonable to assume that people set aside a certain proportion of their discretionary income in order to bring these personal copies into their homes. At the present time some of this discretionary income is used to purchase prerecorded music and some is used to purchase blank tape to record music. Were home taping not possible, all of this discretionary income would be spent on prerecorded product. Despite these findings demonstrating enormous loss to the industry, WCI felt it important to obtain an additional estimate, based on the tapers' own perspectives, of the extent to which taping replaces purchases of prerecorded product. More specifically, they requested that a measure be obtained by asking tapers what they would have done had they been unable to tape. Although it would appear to be relatively simple to ask tapers how their purchasing of prerecorded product 3 would be affected were home taping not possible, this unfortunately is not the case. First, while respondents can give quite accurate descriptions of their own behavior, they often have difficulty in making inferences about how they would behave in hypothetical situations. It was primarily for this reason that the WCI Home Taping Report was based entirely on behavioral data. Second, psychological research has clearly demonstrated that there are systematic biases in the ways that people attribute causes to their own behavior. Thus, it is not surprising that even slight variations in the wording of hypothetical causal questions produce enormous variations in the responses one obtains. Despite these problems, it is sometimes possible to increase the reliability of a respondent's answer to a hypothetical question by getting him or her to focus explicitly on a particular behavioral act. Thus, in the present study respondents are asked to consider the last tape recording of music or other professional entertainment that they made. They are then asked whether they would have purchased that piece of music had they been unable to tape it. Although the above procedure has considerable merit, it still asks respondents to make a hypothetical judgment. Moreover, it is a well-known fact that consumers tend to overestimate their probability of purchase. The extent of the overestimation varies greatly depending upon the type of product being purchased. Our data with respect to records and prerecorded tapes suggest that in this product category the overestimation tends to be a relatively small percentage. As will be seen below, we have attempted to compensate for this overestimation by using a conservative estimate of replacement. Finally, it also must be recognized that the likelihood that one would have purchased the prerecorded version had one not been able to tape will vary considerably depending upon such things as: (1) the reason for taping; (2) the source from which the recording was made (e.g., own records or tapes, borrowed records or tapes, or off the air); (3) the type of music that was recorded; and (4) whether the recording was of a complete album or was an individual selection or an excerpt from an album. However, if one assumes that the tapers interviewed are representative of all tapers, it can be argued that, with a large enough sample, the overall replacement figure obtained would essentially be equivalent to a weighted average across all possible combinations of reasons, sources and types of music. Thus, it is necessary to carefully consider the representativeness of the sample. The remainder of this report describes the methods; procedures and results of a supplemental study directed at the replacement question. |