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This is already a highly concentrated industry with the major participants in a highly concentrated market share. We would prefer not to see the shift of power any more dramatic.
Excluding a lot of this product is going to hurt a lot of people on the production side, which we would not like to see done. Movies on the sale side have to be made available sooner through sequential release to get the separation that is needed. If people are going to rent these things, the product needs to be brought out sooner for rental and then, thereby, sooner for sale. That is how we believe the market needs to be built. It is the way it worked in the book business; there is no reason to think it won't work the same way here if it is given a chance to.
In conclusion, we think Congress should rely on the marketplace to allow a very robust patient to continue to grow. We think surgery is bad public policy. We think this bill is completely unnecessary and is going to hurt a lot of people. It is going to hurt retailers, independent distributors, producers and the consumer. You are looking at a bill which, if enacted, would in one stroke raise prices-and I guess that is a subject of contention, but we believe it would. It will hobble the retailer with a significant cost increase; it will create an economic incentive for piracy, which we are very, very concerned about, which does not exist under the current market structure, and it is going to slow the growth of this business down by making the medium less attractive to the consumer, and we believe it will restrain competition.
This current market is working splendidly for everybody. Please leave it alone. We urge you not to enact this law. We urge you not to modify the first-sale doctrine.
[The statement of Mr. Furst follows:]
STATEMENT OF AUSTIN O. FURST, JR.
Mr. Chairman, Members of the Subcommittee:
My name is Austin 0. Furst, Jr. and I am the Chairman of Vestron Video, the largest independent distributor of home video programming in the United States. On behalf of Vestron I want to thank you for inviting me to testify here today in opposition to H.R. 1029. Because H.R. 1029 would seriously injure the entire home
Vestron's only industry
Vestron opposes the bill for four fundamental
First, the marketplace now works for all distributors of home video product because they all can and
do obtain their fair share of rental revenues.
the MPAA companies are already able to achieve their legislative goal to separate the "sale" and "rental" markets if they relied on sequential release, more innovative distribution of their product and creativity in their new products. Because there is simply no "problem" there is simply no need for legislation.
Second, the existence of independent distributors is critical to independent producers of programming. We are able to offer a variety of financing and alternative distribution outlets to producers. Repealing the
first sale doctrine would, however, severely threaten our viability and would, then, be devastating to the creators who turn to companies such as Vestron to obtain access to the home video market and financing to create their product.
Third, retailers, on whom we are entirely dependent, will be severely injured if H.R. 1029 is enacted and rental prices to the consumer rise as predicted. Furthermore, MPAA-imposed dual inventory plans will significantly restrict retailer flexibility and, alternatively, work to exclude the product of Vestron and independent producers from the market. The creative community and the consumers will be the victims -- not the beneficiaries of these plans.
Finally, the legislation would enhance the industry concentration that already exists in the marketplace domination of MPAA companies. We are greatly concerned that we will be the direct target of those companies, which will not be reluctant to use their power to increase their market share concentration in this growth industry.
Vestron is only a little more than two and a half years old but is already the fourth largest manufacturer and distributor of prerecorded video product in the
United States with nearly a 10% share of all videocassette sales. We distribute worldwide as well, with offices in London, Australia, the Netherlands and elsewhere. Vestron actively acquires and distributes feature films, children's, instructional, and comedy programming, and music video. We also produce original programming, either on our own or in joint co-production ventures with other producers.
We began by acquiring the rights to the
"Time/Life" video library of films and concerts and today have a catalogue of over 350 titles. In 1983, we received more Recording Industry Association of America gold video awards than any other non-MPAA member company. We have distributed what is now the best sell
ing music video
"Making Michael Jackson's 'Thriller'." We have distributed such feature films as "Ft. Apache, The Bronx," "The Cannonball Run," and "Mr. Mom," and such children's programming as "Benji," "The Smurfs and the Magic Flute," an animated feature film, and the acclaimed Marlo Thomas, Harry Belafonte, and Dustin Hoffman
program "Free To Be
You and Me." We also distri
bute such classics as "Citizen Kane," "Top Hat," and "Gunga Din." We are about to release "Gorky Park" and, later this year, Woody Allen's "Broadway Danny Rose."
In short, we are in every sense a "major": not only compete directly, and as complete equals, with the home video divisions of the MPAA-member companies but we do far more than most of them. Yet, unlike those studios we firmly believe that it is exceptionally important to the growth, success, and continued vitality of the home video industry that Congress reject any proposals to tamper with the first sale doctrine.
I. The Marketplace Will Work
Our company is new and forward-looking. We are devoted solely to the distribution and production of home video a medium that is different from any other with which MPAA members have experience. Thus, we are not, unlike those companies, simply interested in the home video industry as an ancillary market. Our perspective, therefore, while certainly not unique, is, I believe, focused on the future and what will make the entire home video industry flourish.
If Left Alone
Flexibility and Home Video Distribution
What is tremendously exciting to us about home video is that it has a wide-open, completely "democratic," distribution structure. No long-standing distribution relationships with exhibitors, no satellites, uplinks, or cable systems are necessary to provide