POPULAR ELECTRONICS What's at stake? Shown here are sales, in millions of units, of various prerecorded media and blank cassettes over the last decade or so. Note that, although few things are easier than making a cassette recording, pre-recorded cassettes still outsell blank ones. Both far outsell CD's. and Instead wanted to continue to press for royalties. As a result, the bill died in subcommittee, and Congress took no action before it adjourned for the year. Even without an official bill to "legitImize it, DAT finally arrived in the US. In June of last year when Sony began officially importing and selling SCMSequipped decks. Almost immediately, a class-action suit was brought against them by the NMPA. The suit was enough to keep other manufacturers from following Sony's lead, and although units from other manufacturers are now available (see Gizmo, elsewhere in this Issue, for a review of one such unit from Sharp). DAT sales fell far short of projections. The Royalty Pact. Despite all the fighting, both sides knew that, without some sort of agreement, everyone had a lot to lose. The hardware manufacturers had the capability to produce new decks that they knew they could sell. The recording industry-though not admitting it publicly-knew that new formats are good for business. (Sales were virtually flat before the introduction of the CD in 1982.) Both sides were talking-in secret-In the spring of this year. The impetus for the falls was likely that the hardware manufacturers were not so much trying to clear the way for DAT as they were looking for a way to ensure that Digital Compact-Cassette and Mini-Disc recorders could enter the market without the same obstacles that hindered DAI John Roach, Chairman of Tandy Electronics (which earlier had committed to introducing DCC to the US. In 1992) appears to have been instrumental in getting the two camps to come to agreement. Like the agreement reached in 1990, the pact would require that all digital consumer recorders contain SCMS circultry. For the first time, however, royalty payments would be required on the sale of all consumer digital recorders and on blank tapes. On recorders, the payment would be 2% of the manufacturer's price, with a minimum royalty of $1, and a maximum of $8 ($12 for dubbing decks). On blank digital tapes, the royalty would be 3%. The royalty payments would be collected by the U.S. Copyright Office and distributed after deductions for the administrative overhead, of course by the Copyright Royalty Tribunal Into two unequal funds. One fund would be for the persons who own the copyright for the musical work, and the other for the copyright owners of the sound recording. The total royalty pool would be divided up as follows: The record companies would get 38.41%; featured artists, 25.6%, songwriters, 16.66%; music publishers. 16.66%; the American Federation of Musicians (which represents non-featured musicians), 1.75%; and the American Federation of Television and Radio Artists (which represents non-featured vocalists), 0.92%. It is unclear to us whether there is any cap on the administrative overhead that can be collected by the various groups who must distribute the monies to the artists and copyright holders. Although no studies have shown that the more popular music is the most recorded, royalty distributions would be based on recording sales; that means that the largest-selling artists would receive the largest payments. The pact marks the first time that the hardware manufacturers have agreed that the payment of royalties should be required for home taping. It also marks the first time that the recording industry has agreed that consumers can make copies of copyrighted recordings for private, noncommercial use without the threat of copyright-infringement sults. Analog tapes are not covered. Nor are video cassette recorders, even those with PCM (pulse-code modulation) digital-audio capabilities. The recording Industry has agreed to stop pressing for royalties on the sale of blank analog cassettes. We expect, however, that the video Industrywhich has also pressed for royalty payments is watching the action closely. The royalty pact has the blessing of numerous groups, many of whom have rarely agreed in the past. Besides the ELA and the RIAA, the list includes the National Music Publishers Association (NMPA); the AFL-CIO Department of Professional Employees; the American Federation of Musicians (AFM); the American Federation of Television and Radio Artists (AFTRA); the American Society of Composers, Authors, and Pubishers (ASCAP); Broadcast Music, Inc. (BMI); the National Academy of Songwriters (NAS); the National Association of Retail Dealers of America (NARDA); the National Consumers League (NCL); the Nashville Songwriters Association In ternational (NSA); and the Songwriters Guild of America. There's only one group that has still to be convinced: Congress. If the pact reached by the various organizations Isn't put into law by Congress, things will be right back where they started. Without a law, it's likely that some manufacturers will refuse to pay royalties. That, of course, will lead to more lawsuits, questions, refusal by recording companies to support the new digital formats, and, ultimately, stalled sales. Time, however, is tight. With the rollout of DCC due early in 1992, it is imperative to both sides that Congress act before the end of the year. As we go to press, no sponsors for a bill have come forward in either House. Congress, however, has historically resisted royalties because they raise the prices of electronic products. However, because prevlous adversaries are coming to Congress with a detailed pact—and, apparently, with no industry dissenters-It would seem that only consumer groups will fight any proposed legislation. So far, none has come forward to do so, despite the "definitive" study by the Office of Technology Assessment that showed that home taping did not hurt the recording Industry. APPENDIX 3. JESSICA LITMAN, "COPYRIGHT LEGISLATION AND TECHNOLOGICAL CHANGE," OREGON LAW REVIEW, VOL. 68, No. 2, (1989) AT 275 JESSICA LITMAN 1989 VOLUME 68 NUMBER 2 OREGON LAW REVIEW Copyright Legislation and Mr. Huddleston. The gentleman realizes that this is a highly Mr. Bankhead. I understand that. Mr. Huddleston. And that it is impossible to write a bill on this Mr. Bankhead. In reply to that, permit me to state it is apparent T HIS is a story about private parties, vested interests, and the inexorable pace of technological change. As of this writing, there are nineteen copyright bills pending before Congress. The number is typical. Throughout this century, members of Congress have introduced innumerable copyright bills, held hearings on many, reported some, and enacted few. In the past few years, Con * Associate Professor of Law, University of Michigan. B.A., 1974, Reed College, M.F.A., 1976, Southern Methodist University; J.D., 1983, Columbia Law School. I would like to thank Jonathan Weinberg, Bruce Frier, Jane Ginsburg, James Boyd White, Jack Kernochan, Becky Eisenberg, Alex Aleinikoff, Pamela Samuelson, Avery Katz, Joel Seligman, Fred Schauer, Don Herzog, Doug Kahn, Chris Whitman, Lee Bollinger, Ralph Brown, William Pierce, and Harry Litman for their helpful comments on earlier versions of this article. 175 CONG. Rec. 11,072 (1932). 276 OREGON LAW REVIEW [Vol. 68, 1989] gress has been inundated with proposals to revise copyright law in light of new technology. That, too, is typical. Recent commentary reflects a dispute over whether the copyright statute can adjust to the current climate of rapid technological change. One camp argues that current technology differs profoundly from prior development and calls into question the assumptions on which our copyright laws are based.3 Another camp insists that copyright law has always faced the problem of technological change and accommodated it with remarkable success. The current challenge, the argument continues, is not qualitatively different from previous challenges, and the copyright statute is equal to the task. Both camps rely heavily on received wisdom about the his 4 2 See, e.g., Copyright Issues Presented by Digital Audio Tape: Joint Hearing before the Subcomm. on Patents, Copyrights and Trademarks of the Senate Comm. on the Judiciary and the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 100th Cong., 1st Sess. (1987); Copyright and New Technologies: Hearings before the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 99th Cong., 1st & 2d Sess. (1987); Home Video Recording: Hearings Before the Senate Judiciary Comm., 99th Cong., 2d Sess. (1987); Home Audio Recording Act: Hearings on S. 1739 before the Senate Comm. on the Judiciary, 99th Cong., 1st & 2d Sess. (1986); OTA Report on Intellectual Property Rights in an Age of Electronics and Information: Joint Hearing before the Subcomm. on Patents. Copyrights and Trademarks of the Senate Comm. on the Judiciary and the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 99th Cong., 2d Sess. (1986); Copyright and Technological Change: Hearings before the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 98th Cong., 1st Sess. (1985). See also Kastenmeier & Remington, The Semiconductor Chip Protection Act of 1984: A Swamp or Firm Ground? 70 MINN. L. REV. 417, 424-30 (1985) (describing proposed copyright amendments preceding the enactment of sui generis protection for semiconductor chips); Olson, The Iron Law of Consensus: Congressional Responses to Proposed Copyright Reforms Since the 1909 Act, 36 J. COPYRIGHT SOC'Y 109, 110-11, 125-30 (1989) (summarizing proposed legislation). See Kost, The End of Copyright, in INTELLECTUAL PROPERTY RIGHTS IN AN ELECTRONIC AGE: PROCEEDINGS OF THe Library oF CONGRESS NETWORK ADVISORY COMM. Meeting, April 22-24, 1987, at 19 (Network Planning Paper No. 16, 1987) (hereinafter Network Planning Paper No. 16]; Fleischmann, The Impact of Digital Technology on Copyright Law, J. PAT. & Trademark Off. SOC'Y 5 (1988). See generally OFFICE OF TECHNOLOGY ASSESSMENT, U.S. CONGRESS, INTELLECTUAL PROPERTY RIGHTS IN AN AGE OF ELECTRONICS AND INFORMATION (1986) (hereinafter OTA REPORT). See. e.g.. Baumgarten & Meyer, Program Copyright and the Office of Technology Assessment (pts. 1 & 2), 4 THE COMPUTER LAW. 8 (Oct. 1987), 1 (Nov. 1987); Marsh, Fair Use and New Technology: The Appropriate Standards to Apply, 5 CARdozo L. Rev. 635 (1984); Oman, The Copyright Law: Can it Wrap Itself Around the New Technologies? in Network Planning Paper No. 16, supra note 3, at 27; see also Davidson, The Black Box Approach to Software Copyright Infringement, 3 The Computer Law. 25, 27-28 (March 1986) (suggesting that copyright protection be extended to recombinant |