to continue to bear the enormous risks of the

marketplace. It will not be able to subsidize specialized forms of music or promote the variety of unknown artists and songwriters it has in the past. In the final analysis, the practical consequences of uncompensated home taping will be detrimental to everyone, including home tapers who will have less and less new material to tape and the large number of Americans (indeed the vast majority) who do not tape, but who buy records. By siphoning off revenues, home taping will not only force record prices higher, but will also cause further diminution in the quantity, quality and variety of music available to the public.

B. The Importance of the Property
Interests at Stake

Musical compositions and sound recordings are, of course, a form of property. Like any other form of property, whether tangible or intangible, its owners possess the fundamental right under our constitutional system to preclude others from interfering with it. Home taping subverts that essential characteristic of copyright ownership. And that is not in anyone's interest. As the Register of Copyrights, Mr. David Ladd, has aptly said:

Some confuse the application of private property principles to sound recordings by assuming that the copyright owner is adequately compensated as long as someone paid for the tangible recording from which tapes are made. That view is in error for two reasons. First, most taping is done from records that the taper never even bought. Second, even as to records the taper purchased, this view reflects a basic misunderstanding of the essential nature of intellectual property and copyright law. The record bought in the store is one type of property. It is tangible. It is owned by the purchaser and can be handled as he or she wishes. Embodied in it, however, is another form of legally protected property intangible, intellectual property protected by our copyright laws. That property does not belong to the purchaser of the record. As indicated in Section III, above, the right to reproduce or tape such property, under the 1976 Copyright Act, belongs

exclusively to the copyright owner.

30/ Speech of David Ladd, Register of Copyrights, before the National Council of Patent Law Association,

Washington, D.C. October 31, 1981.

In understanding this distinction it is important to realize that intellectual property is not like a depreciable asset, such as a building, a car, or a tape recorder. The more such tangible properties are used, the less they are worth. By contrast, a musical composition, like a novel, becomes more valuable the more it is used. Whereas the seller of tangible property is fully compensated at the time of first sale, the owner of a copyright is paid only a small amount on the first sale, and realizes the full worth of his or her creation only as it is increasingly used in the marketplace.

Under fundamental copyright principles, the copyright owner is to be compensated for each

reproduction of his or her creative work, including the home taping of that work. And this is especially so where, as is so often the case, the making of a tape recording actually serves as a substitute for the

purchase of the record.

V. THE LEGISLATIVE SOLUTION

The Congress now has before it legislation that

would provide a workable, even-handed solution to the

44

proposals. RIAA and the Coalition to SAVE AMERICA'S MUSIC support these proposals. They embody the two basic principles that are essential to any solution

of the home taping problem:

(i)

(ii)

That those whose works are being taped should be compensated by means of a royalty on the sale of recording equipment and blank tapes; and

That consumers who tape copyrighted works in their homes for private, noncommercial use should not be liable for copyright infringement.

The Mathias-Edwards proposals make a number

of key findings:

-

that the copyright system has made the United States "a dynamic force in art and culture;"

that the copyright system benefits both
creators and consumers (the former by
providing the incentive for the creation
of new works and the latter by assuring "a
rich and ever-increasing variety of works
from which to choose");

that home taping equipment and tapes are
used for the purpose of reproducing
copyrighted materials; and

that home reproduction of copyrighted musical works and sound recordings is a3f9pyright infringement under current law.31

31/

These findings are set forth in the preamble to Amendment No. 1333 and in Section 1 of H.R.

5705.

The Mathias-Edwards proposals do not represent

a novel approach to resolving the copyright issues raised by home taping. A home audio taping compensation system has been endorsed by joint committees of the two major international copyright treaties (the Berne Union and the Universal Copyright Convention) Forerunner

.32/

legislation has been enacted in two European nations (West Germany and Austria).33/

And as is discussed

more fully below, comparable practices and procedures for determining and implementing the proper distribution of copyright royalties to copyright owners are already in place and are regularly employed by such private organizations as ASCAP and BMI.

32/ See Report of the Working Group on the Legal Problems Arising from the Use of Videocassettes and Audiovisual Discs (1977), reprinted in Copyright 406 (1977); Report of the Subcommittees of the Executive Committee of the Berne Union and of the Intergovernmental Committee of the Universal Copyright Convention on Legal Problems Arising from the Use of Videocassettes and Audiovisual Discs (1978), reprinted in Copyright 87 (1978); Report of the Session, reprinted in Copyright 297 (1979). For a study of home taping under international copyright treaties, see generally Ficsor, "The Home Taping of Protected Works: An Acid Test for Copyright," Copyright 59 (1981).

33/ See West German Copyright Law of 1975, Art. 53(5), reprinted in Copyright Laws and Treaties of the World Item 1 at 10 (Supp. 1973); Austrian Copyright Amendments of 1980, Art. 42(5), reprinted in Copyright (Dec. 1980).