killer" technology? The answer is you would not, and these prac tices will substantially diminish the value of films in the network and syndicated markets. The future impact of these practices by millions of VCR users on our after-theater markets is clear and understandable: Those who invest in and own copyrighted films will be unable to rely on these markets to recoup their investments when hundreds of millions of copies are made. What will copyright owners do in response to this situation? The answer to that question relates directly to the viewing public, which will clearly be harmed if a home video exemption without compensation becomes law. I am not suggesting that film producers will go out of business. But I am most unmistakably saying that film producers will surely change the way they are doing business. They will be forced to contain the exhibition of their theaters and pre-recorded cas films within those markets where they are able to control the for-profit uses of what they own. If this were to occur, the viewing public would have substantially less access to quality audiovisual programming on broadcast television. This would happen as a result of a com bination of several factors related to the economics of the motion picture industry. Without a compensation mechanism, creators will have lessened incentive to create quality films and producers of programs will be far less willing to take financial risks to make innovative programs of creative excellence. I am not saying that only expensive films are good films. I am saying that even "low budget" films today are in the multimillion dollar category. However, for both types of films, there must be strong economic incentives and a marketplace which provides many options for return of revenues in order to offset the risks for those who invest. The uncompensated loss of aftertheater markets will diminish the incentive to create and highlight the risk of financial failure for all types of films. result will inevitably be fewer quality films. The Resident within this logic is a potentially explosive public policy issue of great importance to the Congress. It is, without sounding apocalyptic, a political time bomb. By 1990, one third of Americans will either not have access to cable or not be able to afford it. By 1990, twothirds of Americans will not have video machines. These fellow citizens will be the less comfortable, the less affluent, those who cannot afford to buy $1,000 machines and furnish them with tapes and those who cannot afford the cable fee. These lower-income Americans will continue to depend on free television stations for their home entertainment. But if unlicensed machines can devour property belonging to others, that marketplace soon will become a wasteland filled with game shows and other inexpensive programming. The producers of the most entertaining programs, the best that is created, will be reluctant to confront an unleashed machine with an insatiable appetite for swallowing copyrighted programming. Even the affluent will find home viewing disappointing. They will have less quality programming to tape on their expensive video machines. This is a fair assay of the future which public offi cials must seriously ponder. It is impossible to separate the creative process from the economics of the film industry. When the latter is altered, the former will be sorely affected. In recent testimony before the Senate Judiciary Committee, Mr. Joseph Waz, Deputy Director of the National Citizens Committee for Broadcasting, commented on this phenomenon: Copyright is the mechanism by which we If there is a demonstrable loss to artists and producers as a result of home video recording, and if this loss is so significant as to endanger the wealth of viewing options available to Americans, then the public interest cannot be served by permitting home recording without some suitable compensation to holders of copyrights. Broadcasters are another group which would be harmed by a Congressional reversal of the Ninth Circuit's decision without a mechanism to compensate owners of copyrighted works. Television broadcasters face a shrinkage in advertis ing revenues attributable to factors related to VCR use. VCR manufacturers deliberately design their machines so that VCR owners can use "pause" features to delete commercials while recording programs for their home libraries and "fast forward" features to skip commercials while viewing programs they have recorded, including "time shift" tapings. We are also seeing widespread promotion of automatic electronic commercial killers as indicated earlier. The technology to perfect and commercialize these devices is as predictable as the Japanese entrepreneurial spirit that has made the VCR such a profitable product today. The use of the VCR means that more and more viewers will watch a commercial free VCR-made copy instead of a network broadcast. If someone has a copy of a movie at home and is able to choose between watching that copy free of commercials and a television program interrupted by commercials, can there be any question as to what he will choose? Viewers lost to prime time television are not watching programs and commercials. Broadcast advertising revenues will certainly decrease as advertisement viewing predictably declines among 30 million to 40 million VCR households in 1990. Without compensation from a copyright royalty fee, broadcasters stand to lose access to high quality programming, since copyright owners will be reluctant to release their best products to broadcast television. If broadcasters are forced to show mainly those programs with minimal viewer appeal programs least likely to be taped (or viewed) - the advertisers will not pay substantial sums for prime time commercial slots. |