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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 16mm or video format. In the past ten years, the sale of materials for television (sold in 16mm 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 programming, 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 centrury 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 re-recording and use of their programs for periods ranging from seven days to one year. As an extension of this concept, Federal agencies are now beginning to require that re-recording rights accompany any materials produced with government funds.

Unfortunately, educational institutions in increasing numbers are also recording. and retaining commercially-procuced programs without permission to do so. These programs were licensed only for broadcast, and the non-broadcast 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, etc., to produce programs that very effectively motivate reading and learning skills. With off-air taping 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 16mm 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 television 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 had 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 16mm film production in 1977 with a projected decline of 13 percent in 1978. Since 1977, over ten 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 to day 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 classroom time.

Futhermore, 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. Unfortunately, this policy has nonetheless led to indiscriminate taping of all programs, including commercial productions.

The effect has been the almost total elimination of the private sector from the pre-recorded videotape 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 $18-20 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 productions, 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 priroity, 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 ensure 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 concerned efforts are not made to protect the rights of companies engaged in the production and non-broadcast 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.

Mr. LEHMAN. Next, I would like to call on Stuart Finley, representing the Independent Media Producers Association. Mr. Finley is associated with Stuart Finley Productions in Falls Church, Va. TESTIMONY OF STUART FINLEY, STUART FINLEY PRODUCTIONS, ON BEHALF OF THE INDEPENDENT MEDIA PRODUCERS ASSOCIATION

Mr. FINLEY. Ivan said he wanted a small producer/distributor. And I explained to him that I am 5 foot 81⁄2 inches, and he said that was not exactly what he had in mind.

I explained to him further that my CPA is developing a statement of assets, and he said, "that is closer."

And of course if he listened to what I had to say, perhaps the case will be clinched.

The current phenomenon of dubbing educational and entertainment features off the air seems almost like an extension of America's frontier exploits of earlier days. It's an adventure-and you get something for nothing.

The adventurous side of it is the magic of electronics. I have just bought my own half-inch VHS NV-8300 made by Panasonic for something less than $1,000. I can now present my little gadget_at 2:30 a.m. in the morning to record "Attack of the Mushroom People," and play it back during breakfast instead of having to watch the "Today" show.

The picture is great. In fact, the tuner on the video recorder is better than the one on my 10-year-old TV set and so I now get better pictures than I ever have.

They say that there are about 750,000 home recorders now in use and that by the end of the year there will be about 750,000 in use in America. Three-quarter-inch systems are in wide use but the new halfinch systems are cheaper, smaller, and use smaller, easy-to-store


Since the engineering is newer on the half-inch systems-it is on the same order of magnitude as the three-quarter-inch sets, although some people may argue with this-the picture and audio quality of a 2-hour tape system is about equal to the old more expensive threequarter-inch systems. Four-hour, half-inch systems are reported to suffer significant quality loss. Tapes are not equivalent to the threequarter system, I believe.

Reportedly there are three Sony systems-which are backed by Zenith-all of which are mutually incompatible. There is a single Panasonic system-backed by RCA and a long list of other hardware manufacturers-which is incompatible with the Sony systems.

However, any cassette made on any recorder should be able to be played on another recorder of the same make and model. This means, for example, that if an English teacher has a BetaMax and the school has a BetaMax, the English teacher can record "As You Like It" on a little cassette so-by-so-by-so, and put it in her purse and take it to school, and that is it.

Our little company produces for and distributes to what I call the "Educational Film Market." It's not uncommon to invest between $40,000 and $50,000 in a 23-minute science documentary.

For example, we are currently producing a series called "The Science of Energy" and each of the films we have completed for this series has cost about this much.

Our only income is from the sale of prints or the rental of prints to the educational film market. The Government doesn't pay anything and we have no sponsors. Accordingly, it is our policy that we need to be paid approximately in proportion to circulation. It is an important point.

This leaves us at odds, for example, with the State of Georgia Department of Education which operates a nine-station, interconnected, open-circuit Stgte television network.

If we were to sell them a print of a film, the "duplication rights" which they expect would include dubbing to tape and dubbing off the air.

Their own correspondence concedes: "There are approximately 500 videocassette recorders in Georgia schools."

Approximately 2 years ago, their supervisor of product acquisition

wrote us:

Your objections to the idea of State wide broadcast and duplication rights are noted but I do not find them reasonable. At present there are approximately 475 videotape recorders located in Georgia schools. Even assuming that everyone is used to make a copy of a film and that each copy is then scheduled for repeated use, the greatest number of copies we are talking about is less than 500.

We responded by making a specific offer which was modestly more than the single-print price. They responded by stating that a standard contract was being developed.

We have never received the standard contract, and indeed don't even know if it exists. Perhaps they don't like or need our films. But disregarding that, conceive of the massive confusion of every distributor having to negotiate an elaborate "rights" contract with every film user individually. It would be better if some "standards" could be established. I believe that is the purpose of this meeting and the ad hoc negotiations that are to follow.

However, arrangements can be made for duplication. We have a client who pays annually on the films which they elect to renew from year to year. It is a perfectly acceptable arrangement.

The unusual aspect is the several hundred thousand dollars' worth of mastering and dubbing equipment which they bought and pay to operate.

It is our view that they could simply have bought multiple cassettes from us cheaper. They are spending more money for hardware than for software.

The producer of educational materials can be euchred in other ways than illicit off-air dubbing. For example, the free preview print can be dubbed onto tape at no expense to the user. He just dubs, returns the print, and says "no thanks." But this is complicated by the fact that it takes a 16-millimeter projection system with a special shutter to do this properly.

In fact, dubbing from 16-millimeter film to, for example, half-inch tape is currently difficult to arrange. In order to do this for a client, I research the subject recently and found that you can't get a highquality job done commercially in the Washington area. I have located

a facility in Orlanda, Fla., and another in New Jersey which can do it.

And of course "60 Minutes" showed a few new things in New York City on one of their recent programs.

This brings up another novel scheme. The Oakland, Calif. Unified School District is now operating a "cable" television station on channel 13, KDON. It is soliciting "previews" that would be put on the air.

A representative even went so far as to make a long-distance call to me to solicit such "previews." My response was a little unkind. I suggested that they should be able to convene a preview committee to make purchase evaluations-just like everybody else.

Further, if they haven't bought anything from us in the last 14 years we've been dealing with each other, they must not be a very hot prospect.

One important point is that there is nothing irregular in "authorized" dubbing off the air or in a dubbing facility. For instance, we have just finished producing a series of films for a client which intends to use them in their local school system. This client paid the production fee and owns the distribution rights. They can pull any number of prints, or as many dubs as they want, at cost.

As one of my hobbies, I am vice president of the Independent Media Producers Association, and chairman of its distribution committee. This is a relatively small new group of independent media producers who mobilized to assist in the orientation or perhaps reorientation of the new basic ordering agreement system for Government procurement of production services a very complicated subject.

At its most recent meeting of its board of directors, the subject of unauthorized off-air dubbing was discussed. The most cogent comment which was made is that when a producer of speculative audiovisuals has put hiw own money on the line, he should have the option to determine how they will be used. "Fair use" should not be a polite term for "piracy."

My personal reaction is that if things get too lenient I will have to get out of this business and cease making educational films speculatively. Perhaps I will try real estate. I suggest, and suggest to you now, that other firms might do the same thing. Perhaps we'd never be missed.

However, I think there is a potential reasonable solution. It may not be a split down the middle, but it could satisfy both parties. And a split down the middle doesn't sound very attractive in these ad hoc negotiations. If somebody wants to cut off my leg, I am not particularly satisfied if he only wants to cut off half of my leg.

The point that I would make, and this is only a sliver of a solution to the total problem, because I only represent, I guess, a sliver of the entire problem area is that nothing should force an owner to place his product on television.

In other words, he should have the opportunity to opt out by giving up the TV market. And as I say, that is only a sliver of an idea, but you must realize as these negotiations start there is considerable pessimism about their likelihood to succeed. And the more little points of agreement you get of segments that are represented here, the more likelihood there is of total success.

So I would like to mention that the good intentions and the excellent performance of educators is beyond challenge. What is more

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