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ideal than education? How can earnest teachers, curriculum people, and materials specialists be severely criticized if they try to overcome budget limitations with ingenuity?
I suggest that it is more practical for "good faith" negotiations to be undertaken in an effort to develop a reasonable solution which pleases both parties and injures neither unduly.
This is far better than inciting a riot and barraging Congress with demands. It is fairly obvious that a solution mighe be more sensitively arrived at by quiet negotiations.
While I don't want to sound like "goody-goody-two-shoes" to all you sophisticated people, let's try it-and remember the phrase "good faith" negotiations.
That's the only way we will have success in this. And I certainly thank you.
[The prepared statement of Mr. Finley follows:]
STATEMENT BY STUART FINLEY
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 a thousand dollars. I can now preset my little gadget at 2:30 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 ten 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 half-inch systems are cheaper, smaller and use smaller easy-to-store cassettes. Since the engineering is newer on the half-inch systems, the picture and audio quality of a two-hour tape system is about equal to the old more expensive three-quarter inch systems. Four hour half-inch systems are reported to suffer significant quality loss.
Reportedly there are three Sony systems (which are backed by Zenith) all of which are mutally 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 Beta Max and the school has a BetaMax, the English teacher can record "As You Like It" on a little cassette by Sony.
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.
This leaves us at odds, for example, with the State of Georgia Department of Education which operates a nine-station, interconnected, open-circuit state 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, quote: "There are approximately 500 videocassette recorders in Georgia schools."
Approximately two 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.
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 16mm projection system with a special shutter to do this properly.
In fact, dubbing from 16mm film to, for example, half-inch tape is currently difficult to arrange. In order to do this for a client, I researched the subject recently and found that you can't get a high quality job done commercially in the Washington area. I have located a facility in Orlando, Florida, and another in New Jersey which can do it.
This brings up another novel scheme. The Oakland, California 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 fourteen 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 offthe-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.
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 dicussed.
The most cogent comment which was made is that when a producer of speculative audiovisuals has put his 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 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, here parenthetically, it must be mentioned that the good intentions and the excellent performance of educators is beyond challenge. What is more ideal than education: How can earnest teachers, curriculum people, and materials specialists be severely criticized if they try to overcome budget limitations with ingenuity
I suggest that it is more practical for "good faith" negotiations to be undertaken in an effort to develop a reasonable solution which pleases both parties and injures neither unduly. This is far better than inciting a riot and barraging Congress with demands. It is fairly obvious that a solution might be more sensitively arrived at by quiet negotiations. While I don't want to sound like Goody-Goody-Two-Shoes to all you sophisticated people, let's try it . . . and remember the phrase "good faith" negotiations.
Mr. LEHMAN. Thank you, Mr. Finley.
Next, we will move on to a little larger scale enterprise-in fact, an enterprise with very many vice presidents-and we have several in
Washington. And I am now having the opportunity to meet some of the New York people.
Mr. James Bouras, who is the vice president of the Motion Picture Association of America, will present the point of view of the various enterprises represented by that association.
TESTIMONY OF JAMES BOURAS, VICE PRESIDENT, MOTION PICTURE ASSOCIATION OF AMERICA
Mr. BOURAS. Thank you, Mr. Lehman.
The Motion Picture Association of America, for those of you who are unfamiliar with it, is a trade association for several large motion picture companies-Columbia Pictures, Walt Disney Productions, MGM, Paramount Pictures, Twentieth-Century Fox, United Artists, Universal, Warner Brothers, Allied Artists, and AVCO Embassy, and I should have 10 there. Excuse me if I inadvertently forgot them. We have all been called here today by Chairman Kastenmeier and Congressman Railsback to discuss an unresolved issue in the Copyright Act of 1976, which is the extent to which the fair use doctrine applies in the context of unauthorized video taping off the air.
I think the letter which we all received is instructive. It says, and it quotes from the House report, "The committee believes that the fair use doctrine has some limited application in this area."
I was not present at the Airlie House Conference held in 1977, but I have read the transcript. And if there is anything which emerges clearly from it, it is that whatever definition of "fair use" is arrived at, it is not an answer to this problem.
Whatever our differences of opinion may be in that area, the Airlie House Conference clearly shows there are substantial areas beyond fair use as someone put it at that conference, where there is an educational desire for material and there clearly is not fair use.
Accordingly, it is the view of the motion picture companies that, even though the letter inviting us here today spoke in terms of the limited subject of hopefully arriving at some guidelines for the application of the fair use doctrine in this area, that the ensuing discussions in the months to come should not be circumscribed by that letter. Rather, we think we should consider the problem in toto and that whatever differences there may be with respect to fair use, there are clearly areas beyond fair use in which we would like to work with the educational community to see if some solutions can be found.
In particular, the motion picture companies are willing to work with other copyright proprietors, with all educators, to see if some mechanism can be devised-and I hesitate to use the word "clearinghouse," because that has been belabored, but I guess it is as good a word as any-some mechanism can be devised by which educators can quickly, expeditiously, and conclusively determine whether or not they can obtain permission to use certain kinds of copyrighted material.
Now as I said, we are a trade association. We have 10 member companies. Several of the other groups here are trade associations with individual members. And clearly, each of their members must, even assuming some clearinghouse is set up, reserve the right to determine which of its copyrighted products will be subject to licensing under that sort of scheme.
But as I said, we feel, and feel rather strongly, that everything that has been said today convinces us that the fair use doctrine, although
we may disagree as to how far it goes, at best it has limited application in this area.
And quite frankly, it is the view of the motion picture companies that the taping of entire copyrighted works off the air is an infringement and not a fair use.
I would just like to mention a couple of other matters rather quickly. They are not necessarily related, but we would like to make our points clear.
One is the term "broadcasting." The Airlie House Conference, the House Committee report, speaks in terms of "videotaping off-the-air television broadcasts." It is our understanding of the term "broadcast" that it means precisely what the FCC says it means-namely, conventional television-and that it does not include pay television in whatever form it takes, or satellite transmissions, or various other methods which may be employed in the future.
We are speaking purely about off-air recording of broadcasts.
Second, we think that the discussions in the months to come in terms of motion pictures to which our members own copyrights must also take into account the underlying copyrights held by third persons, authors, musicians, rights possessed by unions and guilds. And we hope in the committees that are appointed to meet in the months to come, that representatives of these organizations will be included.
Third, although it is not really the subject of this conferencewhich is off-the-air recording-I think we want to express our great concern, as Mr. Finley expressed his, about a growing phenomenon which we see particularly in certain areas of higher education where films are licensed and then duplicated-in small part, print-to-print transfers-but in growing and larger part, film-to-tape transfers. We regard that as an outright infringement. And we want to be clear about it.
Fourth, we think that in terms of the discussions which will be held in the months to come, it will be extremely useful to all parties if they brought to bear in those meetings all possible facts and data that they can. We think it would be extremely unproductive to discuss things in a vaccum.
And from our point of view, and I am here to express our point of view, we think it would be extremely useful if in those meetings representatives of the educational community could come with material dealing with the extent to which video machinery has permeated the educational system, the various types of equipment as well as the various uses to which the materiel is put.
And I am particularly concerned about differences between faceto-face use in video classrooms, and use of the material on a closedcircuit system throughout a school system, or even, I am told, in some cases certain educational institutions having low-power authority from the FCC for low-power broadcasting.
All of these questions are going to bear on how successful and productive the discussions are in the months to come.
I don't mean to sound at all belligerent or uncooperative. We are very happy to be here, and we look forward to the meetings in the months to come.
There are certain differences. We hope that in a candid assessment of what those differences are, and a discussion of them, we can resolve a lot of the troublesome issues in the area. But our basic point is
that fair use and fair use alone is not a solution in this area, and that any discussions in the months to come must consider the problem in toto.
Thank you. [Applause.]
Mr. MOONEY. Thank you.
Just joining us is the newest member of the Subcommittee on Courts, Civil Liberties, and the Administration of Justice, and a member I am sure many of you are already familiar with.
And like other new members of our subcommittee, although he was on the full committee during the copyright revision and was extremely helpful, he has not spent a great deal of time, like Chairman Kastenmeier, in reviewing all the details of copyright.
I would like to introduce to you Congressman Carlos Moorhead of California. [Applause.]
We certainly appreciate the Congressman stopping by for a few minutes, and he is gathering material and I am sure is looking forward to reading the transcript that we make here today.
Mr. LEHMAN. Next, I would like to proceed to a series of speakers representing commercial broadcasting. And first, we will hear from Mr. James Popham from the National Association of Broadcasters. And subsequent to that, we will hear from each of the three commercial networks separately.
The National Association of Broadcasters, of course, represents those individual networks, but it also represents individual television broadcast companies throughout the United States.
TESTIMONY OF JAMES J. POPHAM ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS
Mr. POPHAM. Thank you very much.
This is more or less a prepared statement which is available. It is like the pot of coffee over there. There were not enough copies to bring and put on the table and start a riot. If you would like a copy, if you can't wait for the transcript to be published, simply call or write our office or give me your card sometime today and we will be happy to send one.
The NAB, as the National Association of Broadcasters generally is known, is the major trade association of the broadcast industry. Presently, NAB's membership includes 569 of the Nation's broadcast television stations and all nationwide commercial television broadcast networks.
We thank you for the opportunity to present our views today. NAB has joined in previous attempts to resolve the many questions arising from off-air recording of broadcast programing within the legal framework erected by the Copyright Revision Act of 1976. I don't think I have to tell you these efforts have been unsuccessful, and I would be less than candid if I indicated that we continue to confront anything less than a highly controversial matter and a rather formidable task in attempting to resolve it.
Nonetheless, we appreciate the invitation to join in today's discussions and hope that they will engender mutual understanding and respect for one another's needs and interests. So let me emphasize that we come here today not only to speak, but also to listen.