24

copies are doing half that much this
year. Retailers have been hitting
the manufacturers with waves of returned
records at 100 cents on the dollar.
Nearly 1,000 employees have been laid
off in the industry, with CBS Records
the largest U.S. company
leading
the way. Promotion budgets . . . have
been cut severely. The panic factor
has also set in, and the rumor mills

are alive with reports of new shakeups
and layoffs."16/

The downward trend since 1979 has not been

reversed. While unit sales of premium blank tapes have been increasing, unit sales of records and pre-recorded tapes have been declining since that time at an alarming rate. Thus, the latest industry figures just released place total 1981 shipments of records and pre-recorded tapes at 594 million units. That figure represents

16/

"The Record Industry: Meltdown in the Wax Factories," New York, Aug. 13-20, 1979, at 10.

Even the rare hits are selling in smaller numbers than

they once did in large part because they are being taped instead.

The Chairman of A&M Records recently

pointed out that an A&M production which won the award for best selling album in 1976 sold almost seven million copies in that year. Another A&M record which won the same award in 1979 sold just over four million copies and its current hit, which has been on "the top of the charts" as long as was its 1979 record, has not yet

sold 1.7 million copies.17/

For the industry as a whole, manufacturers'

net shipments in 1981 amounted to $3.6 billion, down substantially from the 1978 figure of $4.13 billion.18/

Needless to say, those declining figures are

not based on any single factor. But no matter what explanations are offered, the extraordinary impact of home taping cannot be denied. In siphoning off nearly $1 billion in recording industry revenues, home taping undoubtedly has contributed to:

17/ Testimony of Mr. Jerry Moss before the House Judiciary Subcommittee on Courts, Civil Liberties and the Administration of Justice, April 14, 1982.

18/ Wall Street Journal, Feb. 18, 1972, at 31.

the facts that those still in business have
had to lay off thousands of employees, close
down labels, reduce facilities, consolidate
operations, slash their artist rosters,
sharply limit their signing and promoting
of new talent, and release fewer albums;
and

increases in the price of the records that are sold, thus making it more and more attractive each day to forego the purchase of a record and tape it instead.

In short, widespread home taping has recently created a genuine crisis for the recording industry. But beyond that, the harmful effects of home taping have spread across the country and touched the lives of Americans in cities and towns large and small. They are the songwriters, music publishers, recording artists, vocalists, musicians, retailers, distributors,

manufacturers and suppliers who depend on the vitality of the recording industry for their own livelihoods.

III. HOME AUDIO TAPING CONSTITUTES COPYRIGHT
INFRINGEMENT UNDER CURRENT LAW

The home taping question gained national prominence when the federal Court of Appeals for the

Ninth Circuit

-

in the so-called Betamax case

-

held

that off-the-air taping of copyrighted television

programming in the home for private use constitutes

decide the issue of home audio taping. However, some of those who urge Congress to reverse the Betamax decision have employed the fallacious argument that home video taping should be exempted from copyright infringement liability because home audio taping is already exempt under current law.

There are two separate points at issue. First, home taping proponents claim that home taping is actually exempt from the proscriptions of the Copyright Act of 1976. A second argument is that, even if home taping is not exempt, the "fair use" doctrine set forth in section 107 of the 1976 Act relieves the home taper of any infringement liability.

As demonstrated in the attached memorandum prepared by America's preeminent copyright scholar, UCLA law professor Melville B. Nimmer, this legal argument utterly fails on both counts. Professor Nimmer concludes, as to the first point, that "[t]here is not and never has been an exemption from copyright liability

19/

Universal City Studios Inc. v. Sony Corp. of America, 659 F.2d 963 (9th Cir. 1981), reh'g denied (9th Cir. Jan. 11, 1982), petition for certiorari filed (March 11, 1982).

Second, he concludes that home audio taping is not

immunized from infringement liability on the basis of "fair use" because it does not meet the relevant tests prescribed by the Copyright Act. (Id.)

A.

There Is No Home Audio Taping Exemption

The Copyright Act of 1976 creates a broad

reproduction right in Section 106(1), subject only to

the express exemptions contained in Sections 107 through 118. There is no home recording exemption in any of

those sections.

Moreover, the legislative history of

the 1976 Act is devoid of any reference to a home

recording exemption.

The main source of the claim that there exists

a "home audio recording exemption" is a single passage from the report of the House Judiciary Committee on the Sound Recording Amendment of 1971,2 20/ a statute

that for the first time extended copyright protection to sound recordings and that was addressed to the problem of commercial record piracy. Additional comments on

the home recording issue were made in hearing testimony

20/ See H.R. Rep. No. 92-487, 92nd Cong., 1st Sess. 7(1971).