TESTIMONY OF GEORGE ATKINSON, PRESIDENT, THE VIDEO STATION, INC. Mr. ATKINSON. Mr. Chairman, members of the committee, my name is George Atkinson. I'm the founder and president of the Video Station, Inc., a California corporation. A lot of the testimony given, I don't want to be redundant, but I want to address myself specifically to the issue of the first sale doctrine, the proposal that it be eliminated. Now, in 1977 I founded what I consider the first video retail specialty shop. I think I can lay claim to being the Wilbur Wright of that sort of new retail entity in our community. And I've cloned myself, in a sense, by affiliating with 400 other video stations which we have set up throughout the country and to cut it short again, 8,000 video specialists exist today in the land. And by and large, their businesses have been founded on the fact that there was a first sale doctrine. Now, this first sale doctrine allows us to purchase a tape for which the studios have been well remunerated, and we can exchange that tape. We can rent that tape. We can preview that tape. We can sell that tape. We can burn that tape, if we so wish. It is very important for the committee to understand that the very foundation of video software retailing today as we know it has been based on the first sale doctrine. To eliminate that will cause chaos that is very frightening to our particular end of this busi ness. I look at a video cassette very much like an electronic book and I am the community electronic librarian, if you will, in a novel form of box office, renting these things by and large. Now, when Mr. Valenti cries about the Boston Strangler, maybe he forgot to mention Jack the Ripper and his gang because studios gross margins on this product, which we gladly pay for-we wouldn't be here if it weren't for the studios giving us this pocketbook version of their movies, if you will, paperback. So we pay nicely for it, and library it, and the consumer cannot afford prices of $60 now going up to beyond $100 for a picture. Prices have been raised, as the years have gone on, unlike hardware prices which have come down. It is very interesting how they're milking it, as well they should. Nobody denies them to take all the advantages of what they can make. But to take beyond that, to now eliminate the first sale doctrine, I just want the legislators to be aware, that will seriously undermine software video retailing as we have known it. Ans so that's fundamentally what I want to say, and for the sake of brevity, I just want to point to something in the LA Times this. morning where it says in the first paragraph in the calendar section, "Until the invention of video cassette recorder and disk player, there was little incentive for television to come up with something approaching lasting art." And I'll skip to something here that says in the same article: "Film making has been the great art form up until now. Video making will be the dominant form. It's the most dynamic." I point that out because it is very current what, again, Mr. Valenti said. about directors being out of jobs and everybody being, you know, raped as it were. The VCR is the best friend of Hollywood, and it will create with the 82 million potentially living room theaters that are out there vis-a-vis the 15,000 screens that Mr. Valenti quoted. It will create jobs for every aspect of the Hollywood community and film-making or rather, replaced by video-making will be grander industry for the creative elements than ever before. So it's the first sale doctrine, and looking at the positive side of things, as somebody earlier mentioned, and I ask this committee to keep it simple, and act instead on straightforward legislation proposed by Congressmen Foley and Parris which allows consumers to video tape for noncommercial purposes in their home, taxes nobody. "Royalties" bothers me as much as taxes, the word. It reminds me of kings. And does not propose to kill for first sale doctrine which is unquestionably the very foundation of prerecorded retailing, and only that kind of sensible legislation will properly allow the marketplace to operate freely and find its own destiny. Most importantly, it is proconsumer, probusiness, and antirampant monopoly. Thank you, Mr. Chairman and members of the committee. Mr. KASTENMEIER. Thank you, Mr. Atkinson. Just one question before moving to the last witness, and that is, what is sold or rented at video station retail stores can only be played on a VCR? Can it be played on any other device? Mr. ATKINSON. Well, these are video tapes, prerecorded video tapes and are discs now. Mr. KASTENMEIER. Yes; and they can only be played on a-- Mr. KASTENMEIER. Yes? And nothing else? Nothing else so if anything came to pass that would remove the video cassette recorder from the American home, your business would necessarily collapse? Mr. ATKINSON. Well, it would be-we're in the gas end of it. It would be like removing the car. There's no need for gas stations. Mr. KASTENMEIER. Mr. Niederauer? TESTIMONY OF DAVID NIEDERAUER, PRESIDENT, NIEDERAUER, INC. Mr. NIEDERAUER. Thank you, Mr. Chairman. I am David Niederauer, president of Niederauer, Inc., in San Jose, Calif. I am also here representing the National Association of Retail Dealers of America-NARDA-an organization of approximately 3,600 members who operate more than 10,000 retail stores nationwide. NARDA members sell a variety of merchandise, from home entertainment products to refrigerators to small home appliances. As president of Niederauer, Inc., I own and operate Western Appliance and Television, a large retail store selling a variety of what are termed in the retail sector as "white" and "brown" goods, including televisions, refrigerators, small appliances, and video products. I also own and operate Western Rents, a subsidiary of West |