creative material have no control over what they have created in those markets where they have licensed what they own. Nobody wants to stop, destroy, or ban new technology, I think that the public will have to make its own decisions about what new toys and new machines it wants to buy or does not want to buy. What we want is the Mathias bill to become law so that, one, as Senator DeConcini and you have agreed on, home taping becomes exempt from copyright infringement, and two, linked to that is a compensation mechanism for a copyright royalty fee to be paid by the manufacturers of these machines and blank tapes. Neither you nor I nor anybody in this room or outside this room is going to be able to forecast accurately what new inventions, new copying wizardry, what new electronic magic is going to descend on us that overleaps the law. Senator MATHIAS. That point you just made is right. I interrupt you just for this observation, and I guess for that reason the Congress is always going to be a reactive body rather than an anticipatory body. Mr. VALENTI. That is true, Mr. Chairman. Senator MATHIAS. We cannot anticipate what the future holds or what new developments will come about. But the point that concerns me is that we react so slowly that a tremendous amount of damage gets done while we are waiting. Mr. VALENTI. Well, that is the word I was going to use. Once you see the new machine on the horizon, you know it is an intrusion into the copyright creative community. Then you must act with dispatch in keeping the law up to date, keeping it intact, and precisely defining the rights of copyright owners. If the Congress does not act, I promise you, you are going to see the slow erosion-it will not happen overnight-but the slow erosion of value in copyrighted material. In time you are going to collapse the worth of a great American trade asset. I will tell you this: If any other country in the world possessed the great trade asset we do and so dominated the world in visual creative material, the government of that country would move quickly to protect this great trade treasure because we know if what you own cannot be protected, you do not own anything. Today, I am ready to present to this committee at your behest the results of a new consumer survey conducted by the NPD group and analyzed by the respected economic consulting firm, Battelle Memorial Institute.1 This study was drawn from 1,620 families owning video cassette recorders. It is the freshest look we have at the attitudes, the behavior and what is going on in the marketplace in millions of American households which have video cassette recorders. What this study concludes is: One: The market for VCR's is large and growing rapidly. At the end of 1982 there were 5.3 million VCR's. By 1990 there will be nine times that many. Two: The level of blank video cassettes is growing at the same rapid rate. 1 A copy of the survey, entitled "Videocassette Recorders and the Law of Copyright," has been placed in subcommittee files for future reference. Three: The recording and playback of copyrighted works recorded from the broadcast of cable television and television is far and away the primary use of VCR's. We will document that. The ability to record and play back is the overwhelming reason why people lay out this kind of money to buy a video cassette recorder. Four: Consumers want copies of copyrighted motion pictures and TV shows for their home library. They are making millions of copies of such works by recording off the air, but also, Mr. Chairman, a new entry, by recording and copying rented or borrowed prerecorded cassettes. That is a new danger that we have. Senator MATHIAS. New to the video business, but not new to the audio business. Mr. VALENTI. Oh, not at all. It is new to us. This practice is growing with a malignant speed, I might add. When consumers use VCR's to record programs from advertiser supported television, what we call time shifting, they often exclude commercials either in the recording of the program or in the playback. This assassination of commercials is threatening the very basis of advertiser-supported television which serves the public. That is how you get free television. And that is now at stake. The recording of television programs for late viewing, even if the recording is not retained for the VCR owner's permanent collection, causes subtle but very real harm to the ability of advertisersupported TV to serve advertisers and the public. Finally, there is a delicate economic formula to motion picture and television program production. That is being put to hazard by ever increasing, uncompensated home recording. This affects large and small and creative people that Kay Peters will describe; craftsmen and technicians that Jack Golodner will tell you about, and others who depend on copyright for their livelihood. Their future is at stake. I see the 5-minute warning. Gosh, I moved before the red light went on. I salute myself. Senator MATHIAS. You went right through the red light. [Laughter.] Mr. VALENTI. Well, Mr. Chairman, at least I tried to be brief, but it is so difficult. [The following statement was received for the record:] PREPARED STATEMENT OF JACK VALENTI My name is Jack Valenti. I am the President of the Motion Picture Association of America (MPAA) and represent the following companies: Columbia Picture Industries, Inc. Walt Disney Productions/Buena Vista Distribution Co. Orion Pictures Corporation M-G-M/UA Entertainment Co. Paramount Pictures Corporation Twentieth Century-Fox Film Corporation Universal Pictures, a division of Universal City Studios, Inc. Warner Bros. Inc. I am also the Chairman of the Board of the Alliance of Motion Picture and Television Producers and, in that capacity, Twentieth Century-Fox Film Corporation Paramount Pictures Corporation Walt Disney Productions Aaron Spelling Productions Mary Tyler Moore Enterprises, Inc. Tandem/Embassy Communications Co. On behalf of the companies I represent, I wish to tell you of our vigorous support for S. 31, the "Home Recording Act of 1983," introduced by Senator Charles McC. Mathias. Joining with the MPAA in support of this testimony on S. 31 is a diverse group of organizations collectively called "The Coalition to Preserve the American Copyright." The Coalition now has 55 member groups and individuals including: 1/ Children's Television Workshop Volunteer Lawyers for the Arts National Association of Theatre Owners Screen Actors Guild Association of Talent Agents National Cable TV Association International Alliance of Theatrical Stage Employees and Moving Picture 1/ I have attached as an appendix to this statement a complete list of the member groups of The Coalition to Preserve the American Copyright. - Producers Guild of America, Inc. CBS, Inc. Authors League Writers Guild of America Training Media Distributors Association Actors Equity Association AFTRA Not formally part of the Coalition to Preserve the American Copyright, but strongly supporting S. 31, is the AFLCIO's Department for Professional Employees. All of these organizations believe that our present copyright laws must be kept effective in the face of new technologies. The Coalition has firmly endorsed the principle that copyright owners must be compensated if recording of copyrighted programs for use in the home is allowed. In the one and one-half years since I last appeared before the Senate Judiciary Committee to testify on the so-called "Betamax" issue, many changes have occurred in the videocassette marketplace due to the tremendous growth in sales of videotaping machines. One and one-half years later, I can speak with greater authority about the serious implications that unlicensed and uncompensated home taping have on the fragile economics of motion picture and television production. One and one-half years later, I am prepared to submit new and dramatic evidence; hard statistics concerning how VCRS are used today and what can be expected at the turn of the decade when VCRS are in more than 40 million homes. One and one-half years later, in spite of the fact that the celebrated case of Sony Corporation of America v. Universal City Studios, Inc. is still awaiting a final decision by the Supreme Court, congressional action remains necessary, regardless of what the Court may finally decide. At the same time, one and one-half years later, the threshold issue before this Subcommittee remains the same: How to forge a reasonable and intelligent law in copyright which accommodates both the traditional public interest in compensating copyright owners for the uses made of their creative property as an incentive for future creation and the public interest in encouraging new technologies which make these works more convenient and accessible to the consuming public. We believe that S. 31 strikes a fair and equitable balance between these two public interests by linking an exemption from liability for copyright infringement for VCR owners who tape in their homes for private use with a mechanism to compensate copyright owners for this use of their property. THE COPYRIGHT LAWS: PRESERVING THE INCENTIVE Copyright laws were born out of a need to respond to technology when the printing press made it possible to copy and sell what others had written. The Founding Fathers recognized the importance of unfettered creation of works of the intellect to the development of a free and open society. They enshrined this concept in Article I, Section 8, Clause 8, of the Constitution which grants Congress the power "To Promote the Progress of Science and Useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to Their Respective Writings and Discoveries." The genius of this Constitutional precept is that it recognizes that the private property interests of copyright owners coincide with the public interest; that is, the protection of intellectual property interests both rewards the creator for his labor and provides an incentive for future creativity, which ultimately benefits the public welfare. This is a delicate balance that the Congress has a responsibility to preserve. Moreover, the fact that copyrights are granted for "limited times" aids the public interest by placing these works in the public domain at the end of the copyright term as a contribution to our common heritage. |