the rating services themselves-in which those usages of video cassettes can be reported. No. 2, these machines now are extremely brilliantly conceived, so they have got fast-forward devices, and our research indicates that about 84 percent of the people who watch them later-these record ed programs-watch them without commercials. If in fact it were true that one could record these programs, the reporting were totally accurate, and the commercials could not be deleted, our complaint, I think, would be seriously reduced. Regrettably, that is not the fact. Senator D'AMATO. Is it not true that the Nielsen people and those of the other companies who do this actually have people keeping diaries of the programs and are quite explicit and detailed? Mr. SHEINBERG. No. Senator D'AMATO. It is not? Mr. SHEINBERG. No. Senator D'AMATO. I have been given to believe that they have people actually keeping diaries, and they do these interviews by telephone as to the programs they are watching, and that this is a matter which, with some ingenuity, could be handled. Mr. SHEINBERG. It is my understanding, contrary to what you ap parently believe and what has been testified to today-and I will repeat what I said earlier- Senator D'AMATO. That is an important consideration. Mr. SHEINBERG. I think it is very important. Senator D'AMATO. In other words, if the industry could be assured that there would be some way of monitoring and rating how many people saw the program, et cetera, that might change your opinion in some manner? Mr. SHEINBERG. Providing that the commercial message were also seen in a timely fashion intact. Senator D'AMATO. You would want some in depth research as to the delivery of the advertisement as well? Mr. SHEINBERG. Many advertisers want their message at a given time. You do not want the Christmas message viewed in March. Senator D'AMATO. Understandably so. Let me ask you something. Have you not commissioned any studies on this now? Mr. SHEINBERG. Yes, we have. Senator D'AMATO. All right. Second question: Have you observed any changes-any shifts, for example, in your advertising-as a result of video cassettes, as a result of revenues, as a result of viewership? What statistics or information, if any, have come to your attention that might create this concern at this time? Mr. SHEINBERG. This concern is created, not in a static or fixed form. When we first brought this lawsuit, which is the predecessor of this hearing, there were approximately 20,000 or 30,000 video cassette recorders in the United States. The argument was made by learned counsel, some of whom were in the room, to the effect, "Why should we complain? It is too premature to complain. There are only 20,000 or 30,000 of these things?" Now the argument is, "My God, there are already 3 million of them. What do you expect us to do about it?" Our concern is what is going to happen to us when every American who shops in Mobile and other places owns one of these video cassette recorders. Then it is going to have a very material impact. Senator D'AMATO. Then you are going to be in the same box as the audio people are, because they have got 100 million audio machines out, and it would be impossible to do anything in that case. Is that not a practical matter? Mr. SHEINBERG. I do not represent the audio industry, but I can make the following observations: The recording off the air has significantly destroyed the record business in most countries of the world. It is in very bad shape. I do not purport to be an expert, but that is a fact. If we do not concern ourselves with this now, problem is not going to go away; it is going to get worse. the Senator D'AMATO. Mr. Scheinberg, I understand your concern. The chairman has returned. I would just like to ask his indulgence to ask one other question. I understand your concern in terms of knowing how many advertisers we missed as a result of this TV recording. Let me suggest to you that maybe just possibly-many, many more people may see that show and get that advertising message as a result of recordings because now, when they are out, are watching another show, are working, or whatever, they do have a way by which to receive that message that otherwise they would not. I have no scientific data on this, but I would suggest to you that that could very easily be and should be the subject of a study. I would not be a bit surprised-I would venture to say, again from the seat of my pants-I find a lot of things are done from the seat of your pants here-I would wager that you would find many more people see that message as a result of these little home recorders than otherwise would, even when you get into these TV rating wars and they put one prime program against another. What does a guy do? Switch back and forth? He certainly is not going to look at the commercial, I will tell you that, if he wants to catch a few minutes of one and a few minutes of another, or if he is watching a ball game. As soon as that commercial comes on, he goes over to the other. I have done that. You have done that, have you not? Mr. SHEINBERG. Yes. Senator D'AMATO. I did it the other day. They had me on every television channel. You would think they were saying good things about me. They were saying horrible things, and I was watching to see what the son of a gun on channel 2 said, then 4, and then 7. I was zipping around there. I do not have one of those recorders, so you cannot enjoin me. [Laughter.] Mr. SHEINBERG. Senator, with your indulgence I would like to ask the following question. I ask it rhetorically, because I obviously understand the purpose of these hearings is for you to ask me questions, not me to ask you questions. If the evidence were forthcoming that indeed, No. 1, there is not a good way to report the results of videotape recording in the home Senator D'AMATO. In terms of impact, et cetera? Mr. SHEINBERG. No, just who is watching what and, No. 2, that 84 percent of the people or some significant number like that do eliminate the commercials, then you could understand, could you not, how this would have an adverse impact on us? Senator D'AMATO. I could understand your concern. Notice the way I hedged that answer. Mr. SHEINBERG. There is a gentlemen here, whom I have never met before in my life, who appears to represent some nonbiased testimony, by the name of Mr. Waz of the National Citizens Committee for Broadcasting. With the exception of the fact that he sees this Senate bill as an appropriate interim measure, which he does and therefore supports it, I found myself supporting about 90 percent of what he said. He focused on not only the eagerness to somehow decriminalize-and, by the way, copyright infringement in the home is not a crime. Senator D'AMATO. Pardon me? Mr. SHEINBERG. Copyright infringement in the home is not a crime, so these people who have been variously painted as criminals and the like-there is no issue of their being criminals, and if we say we are not going to proceed against them, I believe we have the authority not to proceed against people who might otherwise be tort feasors of some sort. With the exception of the point that he made, which is that he saw this bill as an appropriate interim device, I found myself subscribing to most of what he said, because he was interested in the impact upon the community that made the product, not because I believe he has any love for those of us who toil in those vineyards, but because he recognized that ultimately a diminution of their productivity is going to impact negatively on consumers. Senator D'AMATO. Mr. Scheinberg, let me assure you that it certainly is not the intention of this Senator-and I am certain that, when I indicate my sentiments, Senator DeConcini shares them as well-to do any kind of injury to those who make possible the entertainment and the programs that those of us would like to see recorded or do record. We do have an underlying concern. Make no mistake about it. Although I support S. 1758, whether it is pride of authorship or not, the totality of the problem is one that should not be negated as a result of what we see to be maybe an interim step. I think Senator DeConcini has indicated that a number of times. We do not say this is the final answer, we do not say this is the end-all and be-all, but really treat it in the manner of dealing with this one particular problem. I think some of the things you have brought forth today-can we take an accurate survey? What happens if we determine, indeed, that the advertising message does not get through and there is that kind of adverse impact that ultimately will reduce the productivity and the capability of the industry to proceed?-those are questions that certainly have to be looked into, with the balancing as to whether you put out of business or allow to be put out of business another industry as well. That is a very legitimate question, and I do not think we should engage in it. That is something that we have to weigh also. Do they face a situation of dire consequences? If we do nothing, do we not just continue to dig that hole for them when someday, if we allow it to go on-as you would seem to indicate, saying, "Well, we have a right to the product wherever and whenever, and it should not be shown again"-I think we could see some dire consequences potentially posed for their industry. So it is a balancing of those two. With that, I turn the chair back over to Senator DeConcini who has come back. Senator DECONCINI. Mr. Sheinberg, did you finish your statement? Mr. SHEINBERG. I finished my statement. Senator DECONCINI. Mr. Williams, do you have a statement? Senator DECONCINI. You may proceed, please. STATEMENT OF W. G. WILLIAMS, FORMER PRESIDENT AND CURRENT BOARD MEMBER, INDEPENDENT MEDIA PRODUCERS ASSOCIATION Mr. WILLIAMS. I am W. G. Williams, and I am on the board of directors of the Independent Media Producers Association. The members of the Independent Media Producers Association, a nationwide organization of producers of motion pictures and videotapes, have a great interest in the outcome of this debate over the future legality of the off-air videotaping of broadcast materials. To muddy the waters a bit perhaps, our primary concern is one that has not yet been brought to the attention of this committee. Senate bill 1758, which was introduced in response to the Universal v. Sony decision with the intent of legalizing home video recording of off-air material, is, we feel, much broader than necessary to achieve the goal. The bill gives a tremendous foot in the door to those who would make unauthorized copies of all types of video and motion picture programming, broadcast or not. In fact, the limiting words "broadcast," "home," or "television" do not even appear in the bill. The apparent intent of the bill is definitely worthwhile-to allow American citizens the right to this technological convenience that we have been discussing-but this must be done without disallowing the copyright holders a fair return on their investment. If the profit incentive is removed or significantly reduced for the producers, all those who enjoy film and television programs will suffer because independent producers will either turn their attentions to other endeavors or will produce materials that will be specifically excluded from any market that cannot be tightly controled. Members of IMPA, with a few exceptions, are not the large studios or corporations that have tremendous resources to fall back upon or even tremendous numbers of copyrights. Rather, most are independent entrepreneurs or small businesses that produce programs for training and education as well as entertainment. Often these programs are produced spontaneously in the hopes of recouping costs through future sales. Therefore, the making of any unauthorized duplicates of their programs represents a significant financial loss to our producers. Although this unauthorized duplication has been a problem for some time, the passage of S. 1758 in its present form will only exacerbate the situation. As a result, a major concern of our organization is that the passage of this bill, as written, could be construed by the general public to be a wide opening of the door to unauthorized duplication. The bill, as written states that it: ** is not an infringement of copyright for an individual to record copyrighted works on a video recorder if the recording is made for private use and the recording is not used in a commercial nature. Let me illustrate our concerns with this wording that I just used. Does S. 1758 mean that an individual may order a preview copy of any kind of film or videotape or obtain such a program on approval from an authorized distributor-we are not talking broadcastmake his or her own copy of that program, and return the original material to the distributor without a purchase? The wording of S. 1758 seems to give away the store. Since broadcasting is not mentioned in the bill, it would also seem that the current wording of the bill would allow anyone to copy any copyrighted films or tapes obtained from any source and not be in violation of the Copyright Act as long as it is for private use and not used in a commercial nature. Under S. 1758 it would seem that the copyright holder would have no recourse or make very few sales. Senator DECONCINI. Excuse me, Mr. Williams, if I understand what you are saying, would it not require a person to have two recorders? Mr. WILLIAMS. That is true. Senator DECONCINI. So they would have to go out to put together an operation where they wanted to borrow one. Mr. WILLIAMS. That is very true. Senator DECONCINI. So they would have to double their investment? Mr. WILLIAMS. Right. An independent producer of motion pictures or television programing would seem to have far less hope of ever making a return on his or her investment as a result of this apparent abrogation of his or her copyright. If the wording of the bill were sufficiently narrow as to be limited to that material which could be obtained off-air from open circuit broadcasting or even cable television, where the producers have already been reimbursed for their efforts at least theoretically-it would be different. But the wording of the bill is so loose as to endanger the copyright protection of all video material. With the passage of S. 1758 in its present form, the holder of copyrights on video material would have little hope of ever making a return on a speculative investment and might well decide that plumbing or carpentry would be a far better way to make a living. That may well prove to be the case. The end result could be a reduction in the amount of future programing, since there would be little chance of paying the developmental costs of any programs not having a prior guarantee of network or theatrical play. This would seem to be to the detriment of the very people that the bill is intended to benefit, and this was one of the concerns voiced by Mr. Waz. Currently this unauthor |