Mr. Chairman, you will now be able to listen to your favorite music, whether it's country, classical, jazz or rock, on innovative state-of-the-art digital recording equipment. New digital audio recording technologies bring the listener as close as possible to the experience of being right there in the recording studio with the artist. In sum, we all benefit from this legislation. I would encourage your swift enactment of this bill so as to make this vision a reality.

Mr. MOORHEAD Our next witness will be John Roach, who is the president, chairman of the board, and chief executive officer of Tandy Corp. Thank you, Mr. Roach.

STATEMENT OF JOHN V. ROACH, CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER, AND PRESIDENT, TANDY CORP., FORT WORTH, TX

Mr. ROACH. Thank you, Mr. Moorhead.

Tandy is a Texas-based company that manufactures and sells consumer electronic products. We are proud of being the largest U.S.-headquartered consumer electronics company in the business. We have over 20 factories in the United States and employ 39,000 people in the United States, and do business with 50 million Americans.

I am also representing today the Electronic Industries Association, which is a leading organization representing manufacturers in the electronics industry, and the Home Recording Rights Coalition that represents consumers, retailers and manufacturers who have kept a vigil on home taping rights over the last decade. All of these groups support House bill 3204.

Over the years, Mr. Chairman, this committee has worked hard to bring the interested parties together and yet protect the consumer in the process. Similarly, last year, when the music and consumer electronics industry representatives were before the Senate Commerce Committee, your colleagues in the other chamber asked us to work out a compromise. Today I can report that we have. We have sat down with members of the music industry and negotiated a compromise that we believe is fair.

As a result of your leadership and support, Mr. Chairman, and also with Chairman Brooks and Mr. Moorhead's support and your other colleagues, this historic compromise is now embodied in the legislation before you today. The Audio Home Recording Act is an equitable solution that promises everyone a share in the benefits of the digital audio revolution. This legislation enables consumers to make recordings for their own private, noncommercial use, eliminates manufacturers or retailer liability for alleged copyright infringement, and fosters music industry support for a new generation of digital recording formats.

In addition to providing manufacturers and retailers with confidence to introduce and market new audio products, the act would instill consumers with confidence to purchase and enjoy them. For too long the public has paid the cost of controversy and suffered from the absence of new products. Thus, the legislation expressly states that consumers have the right to use both digital and analog recorders to make recordings at home, removing any legal uncertainty our customers may have about whether they can make copies or prerecorded albums for broadcast for their own private use. In exchange for these assurances, the bill requires manufacturers to pay a royalty on the sale of digital recorders and blank digital tapes or other digital media. The royalties would go into a special fund for distribution to music creators and copyright holders.

It is not a secret that paying royalties to the music industry is not something that I particularly relish, but Tandy, like other manufacturers, both pays and receives royalties under circumstances

where the company paying is not actually convinced that it infringes. It is part of the cost of doing business. In this case, we are willing to assume this necessary and predictable overhead to keep copyright claimants from undermining new products.

I would like to emphasize that the legislation has been carefully circumscribed in its provisions and effects. The legislation covers only consumer model "digital audio recording devices" designed and marketed for the primary purpose of making copies of audio recordings. The legislation does not encompass personal computers, videocassette recorders, multimedia devices, answering or dictating machines, or professional products that would be used by professional musicians or recording studies.

Given Tandy's diverse product line, no one is more concerned than we are about the possibility of a mistaken or overly broad interpretation of this legislation, either directly or in terms of precedent. We and fellow industry representatives have consulted with other groups and industries to ensure that we have not overlooked anything in this respect.

With the benefit of these consultations, we have been able to recommend eve specific language, and we can say with confidence that the bill comports with its intention, that the royalty obligation and serial copying limitation govern only recorders and blank media in the marketplace that are explicitly and primarily for the purpose of consumer digital audio recording from music albums. Thus, VCR's, computers, and other devices not primarily used for digital audio recording are outside the scope of the bill. Language refinements in this respect have been incorporated in the version of this legislation in the other body, and we recommend them to this subcommittee as well.

In the past few years we have learned a lot of things. It is that, for one thing, all the legal feuding has not promoted new technology. Our product shelves, though by no means bare, have been bare of those things that we were technically capable of producing.

This solution guarantees at long last that consumers have the right to record with both digital and analog audio devices. Its immunity from copyright infringement suits provision allows Tandy and other manufacturers and retailers to market new audio digital recording technology without fear of legal challenge. To make these new digital products more attractive to consumers, the bill provides strong incentive for record companies to release new albums in these formats. If the legislation is passed now, it will permit companies like Tandy to get a return on the vast investments we've made in digital R&D technology, it will create jobs in the Fort Worth, TX, plant for the manufacturer of a digital compact cassette recorder, one of the few new consumer electronic products produced from the beginning in this country in the last 15 years, jobs in Santa Clara, CA, for tape manufacturing facilities, and in every State where we have retail business and where the consumers will benefit from this.

Consumers, retailers, manufacturers and the music industry all stand to benefit from this act. It's a fair deal for all of us. We appreciate your support and we hope that the bill will pass without delay.

Mr. MOORHEAD. Thank you very much, Mr. Roach.

[The prepared statement of Mr. Roach follows:]

Mr. Chairman and Members of the Subcommittee:

My name is John Roach. I am chairman of the board, chief executive officer, and president of Tandy Corporation. Tandy is a Texas-based company that manufactures and sells business and consumer electronics products. We are proud of our being the largest U.S.-headquartered consumer electronics company in the business. We have 20 factories nationwide, employ over 27,000 people in the United States, and do business with over 50 million Americans each year. Last year, Tandy's sales exceeded 4.5 billion dollars.

Tandy's 7,400 stores and dealers comprise the nation's largest chain of consumer electronics stores. Most of these stores, which operate under the Radio Shack, Scott, McDuff and VideoConcepts names, sell a diverse product line that includes everything from batteries to personal and business computers, as well as a wide array of audio recorders, audio tape, and recording accessories. In 1990, we began opening a new chain of stores Edge in Electronics with a more upscale image and a state-of-the-art product line. And just last fall we opened our first Computer City

Supercenter, which will feature America's best selling brands of computers including IBM, Apple, Tandy, Compaq, and AST.

the

I am honored to appear before you today to testify in support of H.R. 3204 -- the Audio Home Recording Act of 1991 -- on behalf of Tandy as well as the Electronic Industries Association and the Home Recording Rights Coalition. The Consumer Electronics Group of EIA, of which Tandy is a member, represents the leading manufacturers of electronics products that entertain and inform American consumers. The Home Recording Rights Coalition is a coalition of consumers, retailers, and manufacturers of recording products, also including Tandy. Since its founding a decade ago, the HRRC has sought to preserve the rights of consumers to make noncommercial home recording for private use. I am therefore pleased to convey the unqualified support of Tandy, EIA, and the HRRC for H.R. 3204.

After years of controversy and uncertainty about home recording, the Audio Home Recording Act embodies an historic compromise among the consumer electronics industry, the recording industry, artists, and copyright owners. The Act is significant because it ends the debate over private, noncommercial audio home recording, opening the door to a vibrant market free of legal concerns. I will focus my remarks this morning on what the Audio Home Recording Act means to consumer electronics manufacturers and retailers ultimately, to our customers.

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At the very outset, I can state unequivocally that there is nothing more important to the vitality and robustness of the consumer electronics industry than new technology. It is what keeps manufacturers manufacturing, retailers retailing, and consumers consuming. And just as important, new audio technology is what keeps the record industry recording.