Absent prompt Congressional action, the rental situation may soon worsen. A recent technological the development of the digital "compact breakthrough - promises to make record rental far more attractive and widespread than it is today. The digital compact disc is a small, virtually indestructible record album. It will not wear out. And it provides finer sound reproduction than ever before available.' Rental shops will be able to rent out each compact disc hundreds of times, thus reducing the cost per rental to extremely low levels. At the same time, the technology of the compact disc will ensure that rental customers receive a virtually untarnished master recording the perfect instrument for making high-quality duplicates. Ironically, the record rental phenomenon threatens to transform the most significant innovation in recording since the development of stereophonic sound into a devastating weapon against the American music industry. 9 See Unger, "The Compact Discs: Hearing is Believing, " New York, April 4, 1983, at 55. Prompt legislative action is necessary to protect America's music creators, performers, publishers, manufacturers, and retailers against the threat posed by rental record shops. As the experience with rental shops in Japan has demonstrated, that threat is quite serious. A. The Japanese Experience In just three years, 1600 record rental shops have sprung up in Japan; they now represent more than 20 percent of the retail record outlets there. The Japanese recording industry has studied the effects of these shops, and its findings constitute a sharp warning to the music community in this country. As previously indicated, when the patrons of rental shops in Japan were surveyed, over 97% of them stated that they taped the rented albums at home. Moreover (as the chart on the next page illustrates), over 61% of these tapes were in turn lent to the renter's friends (on average, to three or four persons); these 10 people, too, were able to retape the rented album indirectly. ・レコードから音したテープを友人に貸したりあげたりすることがある人は、 6 15%(上くるる 9.3%, である。 S22%)で過半数を占め、 全くない人は3&5 People who gave or lent recorded tapes to friends account and 52.2% occasionally). They cover over one-half, while people who did not rive or lend account for 38.5. Each person belongs to this 51.5% lends his recordings 11 years. Legitimate retailers have been hit especially hard. Retail record stores located near the rental 12 shops have seen their sales plummet by 30%. Not surprisingly, the president of the Japan Phonograph earning the funds required for creation of new recordings and finally be led to collapse. B. 13 Widespread Rentals Will As more rental shops open in this country, their cumulative effect on the music community will be devastating. Copyright owners are hurt by record rentals in two ways: the owners earn no revenues on the rentals themselves; and record rentals displace record sales. Once a shop has purchased an album, it pays no further compensation to the copyright owners, irrespective of 11 See 1983 Kamei Letter at 1-2. 12 See 1982 Kamei Letter at 1, 2. 13 Letter from Takami Shobochi, President, Japan Phonograph Record Association (May 14, 1982), at 1. |