The combination of all these factors-substantial investment, narrow marketplace, limited number of copies sold, and sales over an extended period-means that uncompensated use of duplication of these materials has a severe impact on the economic viability of the educational media industry.

There have been several important trends in the U.S. economy and in education that have had a significant impact on the educational media industry since 1968.

Of major importance is the sharp reduction in the real dollars available for acquisition of educational media: for example, funding for the Federal school library resources program-on which schools are heavily dependent has decreased by $10 million.

This reduction in funding, combined with inflation reflected by a 75-percent increase in the consumer price index over the past 10 years, has seriously affected every school budget.

A second factor, harder to measure but obviously of consequence, was the decrease in actual number of school buildings and, with the trend toward regionalization and consortia, a drop in the number of purchasers of 16-millimeter film.

It should be no surprise then to note that total industry sales from 1974-77 actually decreased by $17.3 million. If an inflation factor were considered, the decrease in real dollars would be even more dramatic.

Although 16-millimeter film sales rose during this period, it was by a mere $6.3 million. When allowance is made for the price increases in 16-millimeter film for the same 4-year period, the number of units sold decreased by 16 percent in those 4 years.

These were indeed signs of a very troubled industry. Many producers, therefore, looked to the emerging video technology which had begun to prove itself both as a new medium and as an effective educational tool.

While many schools, colleges, and public libraries developed programs using video materials in a variety of ways, our members-the companies in the media industry-worked with these educators by providing materials for use on video systems and by bringing to them materials which were produced originally in broadcast forms.

Television is becoming increasingly important to the educational media industry, not only as a market, but as a source of product which can be acquired for nonbroadcasting distribution. Individual educational stations and the PBS network, and to a lesser degree the commercial networks, are potential customers for our member producers who can sell or license their materials for broadcast.

An equally important source of revenue is the distribution of broadcast programs to schools and libraries in 16-millimeter or video format. In the past 10 years, the sale of materials for television-sold in 16millimeter or videocassette format-has more than doubled. During the same period of time, the dollar volume of sales of educational films to television-public and private-more than tripled.

Video recording capability has permitted schools to make use of video programing, when appropriate, in new, creative ways. Our members have worked with educators throughout the country to make materials available in video formats and to develop licensing arrangements for special duplication and use situations.

Our association has encouraged and assisted our members in developing licensing programs and has recently published a Directory of

Rights and Permission Officers to assist educators in locating materials and licensing agencies.

In a dangerous irony, what promised to bring the classroom into the 20th century now threatens the very existence of the producers and creators who pioneered this exciting medium.

The growing acquisition and use of video recording facilities in the schools was stimulated further by the policies promulgated by several publicly financed broadcast entities, including PBS, Agency for Instructional Television, and Great Plains National Instructional Television Library, which permit free rerecording and use of their programs for periods ranging from 7 days to 1 year. As an extension of this concept, Federal agencies are now beginning to require that rerecording rights accompany any materials producd with Government funds. Unfortunately, educational institutions in increasing numbers are also recording and retaining commercially produced programs without permission to do so. These programs were licensed only for broadcast, and the nonbroadcast distribution rights were reserved to the producer for his own distribution or to license an educational distributor.

Unlicensed off-air recording and subsequent use of copyrighted programs has forced several commercial producers and distributors to draw back from their partnerships with both public and commercial television stations-partnerships which have potentially great benefits for education as well as for individual companies.

One company has refused to renew all program licenses to educational television stations that were in effect in the previous year.

It must also be realized that it is not only the film companies which are affected by off-air taping. The consequences of unlicensed taping are desperately serious for sound filmstrip and audio producers because these companies license recording and filmstrip rights, independent of film rights, from publishers and authors, paying them an advance against royalties, and in addition paying scriptwriters, actors, artists, musicians, et cetera, to produce programs that very effectively motivate reading and learning skills. With off-air typing of the same titles, these companies are jeopardizing their market.

Likewise, commercial distributors are more and more reluctant to acquire rights to distribute broadcast materials in 16-millimeter or video format, because of the same fear that their market has already been damaged by off-air recording.

The effect of this is already being felt. Some public televisions stations which depend on royalties from commercial distribution of their programs for funds to be used in new production can no longer easily convince private companies to invest in the acquisition of these distribution rights.

AMP believes that the present symbiotic relationship between the public and private components of the educational community is in serious danger. The relationship requires a balance between public and private sector involvement in the production of educational materials. Increased public and governmental involvement in the production of educational programs has reached dramatic proportions-through specific production grants and subsidy of free off-air recording and use rights.

The implications of this situation are grave.

First, if private producers and distributors are unable to realize the needed return on their investment, production of quality materials

will decrease as companies leave the industry or are forced to drastically curb their production investments. This is not speculation; already we have seen the first decrease in production in the history of the industry.

The 1977 AMP analysis of industry trends revealed an 18-percent decline in 16-millimeter film production in 1977 with a projected decline of 13 percent in 1978.

Since 1977 over 10 companies have either gone out of business, been acquired by larger companies, or changed to printed materials, since continued A-V production investments could not be justified.

If this trend continues, not only will teachers and students suffer from a greatly reduced variety of materials from which to choose, but many materials produced specifically for instruction will, by necessity, fall by the wayside.

Educational producers today design programs to conform to the needs and curricula of the schools. If television programs taped off the air are increasingly substituted for curriculum materials, educators will be depriving their classrooms of many of the support systems built into their products by educational distributors.

And if private production of materials decreases dramatically, what consequences does that have for the still numerous school systems which do not have video recording capabilities?

Second, increased government subsidies for production of educational materials will force educators faced with austere budgets to opt for these products-not because they are necessarily better, but because they are less expensive.

The "low bid" syndrome must not be allowed to unduly influence the selection of the teaching and learning tools that structure so much of the classroom time.

Furthermore, a national curriculum runs counter to the basic framework of our educational system; yet a trend in this direction can only be strengthened by a shift toward reliance on government for the funding of materials production.

Serious consideration should be given to the present-day situation in Canada, where more of the large organizations in the communications field are agencies of the Federal or Provincial Governments.

The Ontario Educational Communications Authority can function as a good example of the above process. OECA is mandated to produce and distribute-including broadcast-educational materials within the Province of Ontario. Almost all of its funding is provided by the Provincial Government, although about 5 percent is derived from the sale of its programs to other jurisdictions.

OECA has, from the outset, encouraged schools and other community organizations to tape its programs off the air for later use without charge.

The effect has been the almost total elimination of the private sector from the prerecorded videotaped market. The OECA pricing policy has created the standard for the marketplace-customers think that a half hour tape should cost no more than the $18 to $20 charged by OECA, a fee made possible only by governmental subsidy.

The net result has been the almost total dependence of the educational broadcaster-and the growing dependence of schools and libraries-upon government-funded production, and that funding is now in jeopardy. Without careful assessment of the roles of both

public and private sector producers in this country, the same results can almost be assured.

Another very important consideration, especially today, is the economic impact which will be felt if a private educational media industry is unable to survive.

In a time when the government and citizens alike have set reduced government spending as a national priority, it does not seem to make sense to increase public spending in an area where the private sector, if allowed, is willing to provide the necessary investment for both production and distribution-and is willing to pay distribution royalties to those public entities, such as public television stations, which do have a mandate to produce materials to meet public needs. The private sector-in this instance the educational media industry has the further advantage of operating in an open marketplace where competition will help insure quality products at a fair price and where the success of a product or a company will bring increased tax revenue.

On the other hand, increased public spending will be necessary if concerted efforts are not made to protect the rights of companies engaged in the production and nonbroadcast distribution of programs aired on television.

In conclusion, the educational media business is in a unique position a very small industry almost entirely dependent on sales to schools, whose products are the creative presentations of ideas. We deal in "intellectual property," not in wood, or metal, or plastic, but "intellectual property" which is the very heart of education. We have over the years worked with our colleagues in education to try to meet their needs as they arose. In recent years, we have welcomed the new technology and devised new methods to provide access to our products as the schools' requirements have changed.

Although we do not deal in wood or metal or plastic, but in the dissemination of ideas, we believe that these "intellectual properties" must be valued and their creators and distributors fairly compensated to ensure the future growth and improvement of American education.

We agree that access to ideas is vital, but we insist that it is not in the national interest to destroy the free market source of these materials in order to achieve free access.

We assure the committee of our willingness to work with the educational community to provide reasonable access to copyrighted products without depriving creators and producers of their rights. Thank you.

[Applause.]

[The prepared statement of the Association of Media Producers follows:]

STATEMENT OF THE ASSOCIATION OF MEDIA PRODUCERS ON OFF-THE-AIR RECORDING

The Association of Media Producers is the national association of producers and distributors of audio-visual educational materials. Virtually the only market for our products is schools and libraries.

Our members are strong advocates of increased and more effective utilization of technology in education and training, and our industry plays a vital role in the country's educational system. We agree wholeheartedly that students and teachers should have convenient access to the widest possible variety of materials which will assist in the learning process; indeed that is the reason our companies exist.

However, we are deeply concerned that in the endeavor to meet the needs of our educational system, the impact on creators of these materials in being neglected. The goal of everyone in this room is to improve instruction. This can only be fully achieved if a proper balance exists between the requirements of the schools and the rights which copyright proprietors must possess-if they are to continue to provide the very instructional materials teachers feel are an essential part of quality education.

We must work together to meet the needs of our schools and to ensure just compensation to copyright proprietors for the use of materials taped off-the-air. Only then can we assure the survival of a private educational media industry and prevent the educational system from becoming completely dependent on instructional resources designed and produced under the aegis of government agencies.

Most people think of films and television in terms of entertainment programs, large Hollywood studios, and commercial TV networks. However, that is not our industry. It is important to understand the unique nature of the educational media industry in order to recognize the effect of unauthorized off-air recording.

First, our industry is composed primarily of small companies: 43.2 percent of AMP's members in 1978 had gross annual sales volumes of $500,000 or less; less than 7 percent of our members had gross sales volumes of $5 million or more. In today's economy, this is indeed "small business."

Second, we sell our products to a very limited marketplace. Educational materials are not sold to consumers in general, nor for entertainment; in 1978, schools, colleges and libraries accounted for 93 percent of industry sales. The number of schools and libraries themselves is very limited. For example, there are fewer than 5,000 school and library customers for educational films in the United States.

Third, the number of copies of audio-visual products produced and sold is very limited. Compared with textbooks, for example, which are generally provided on the basis of one to a student, one or two prints of a 16mm educational film may serve an entire school system of moderate size; a single filmstrip may be used by all the pupils in one or more grades. A successful film will sell a few hundred prints during its lifetime; a well-received filmstrip set, in the low thousands-and this is over a five to ten year period.

The initial investment in an educational audio-visual product is substantial and includes market research, consultation with educational specialists, development, production, and market testing before we begin marketing. The combination of all these factors substantial investment, narrow marketplace, limited number of copies sold, and sales over an extended period-means that uncompensated use of duplication of these materials has a severe impact on the economic viability of the educational media industry.

There have been several important trends in the U.S. economy and in education that have had a significant impact on the educational media industry since 1968. Of major importance is the sharp reduction in the real dollars available for acquisition of educational media: for example, funding for the Federal school library resources program (on which schools are heavily dependent) has decreased by $10 million. This reduction in funding, combined with inflation reflected by a 75 percent increase in the consumer price index over the past ten years, has seriously affected every school budget.

A second factor, harder to measure but obviously of consequence, was the decrease in actual number of school buildings and, with the trend toward regionalization and consortia, a drop in the number of purchasers of 16mm film.

It should be no surprise, then, to note that total industry sales from 1974-77 actually decreased by $17.3 million. If an inflation factor were considered, the decrease in real dollars would be even more dramatic. Although 16mm film sales rose during this period, it was by a mere $6.3 million. When allowance is made for the price increases in 16mm film for the same four year period, the number of units sold decreased by 16 percent in those four years.

These were indeed signs of a very troubled industry. Many producers, therefore, looked to the emerging video technology, which had begun to prove itself both as a new medium and as an effective educational tool.

While many schools, colleges, and public libraries developed programs using video materials in a variety of ways, our members-the companies in the media industry-worked with these educators by providing materials for use on video systems and by bringing to them materials which were produced originally in broadcast forms.

Television is becoming increasingly important to the educational media industry, not only as a market, but as a source of product which can be acquired for non-broadcast distribution. Individual educational stations and the PBS network, and, to a