Geoffrey Hull
Middle Tennessee State University
The Audio Home Recording Act of 19921 (AHRA) was an attempt by Congress to enact a legal and economic compromise between the interests of audio hardware manufacturers, blank recording media manufacturers, sound recording and musical composition copyright owners, songwriters and recording artists, and consumers.2 It ended nearly twenty years of dispute among those parties about whether consumers who copied recordings at home for their own use were infringing the copyrights of the sound recordings or the musical compositions embodied in those recordings.3 The solution exempted private, non-commercial copying in analog or digital format from copyright infringement, placed a royalty on the sale of digital audio recording devices and blank digital audio recording media, and required manufacturers of digital recorders to incorporate a copy management system into recorders to prevent serial copying.4
Despite the efforts of the manufacturers, digital audio tape (DAT) recorders and MiniDisc digital recorders never became popular with American consumers. Royalties collected by the Copyright Office for the digital recorders and blank media were therefore disappointingly low. In 1995 Billboard reported, “[D]igital recording hardware has not caught on in the consumer marketplace. DCC [digital compact cassette] has been pronounced dead by industry executives, and the health of the rival MiniDisc is frail.”5 In 1998 the record companies and artists sued Diamond Multimedia, Inc. to stop production of the “Rio” and other Diamond products that could download and store digital reproductions of recordings and songs in MP3 format. A federal appeals court held that the devices were not “digital recorders” within the meaning of the statute and that Diamond was not required to pay royalties or include copy management software in them. It appeared that the Audio Home Recording Act was a “bust.”
This article argues that marketplace factors, which became very apparent in 2000, are breathing new life into the Act and require that it be amended to restore the balance of benefits among the AHRA beneficiaries. The focus throughout is on the interplay between the marketplace and the law. The article begins by examining the marketplace and legal factors that led to the enactment of the Audio Home Recording Act. After a review of the key provisions of the act, it then follows the marketplace and legal factors from 1992 through the Diamond Multimedia case. Finally, an examination of current marketplace and legal factors leads to the conclusion that far from being a “dead duck,” the Audio Home Recording Act of 1992 is alive and well. It may yet prove to be a significant source of relief to consumers who will have readily available digital recorders, to manufacturers who will be able to market the digital recorders and blank media without concern over litigation, and to authors and copyright owners who could see a significant source of increased royalties from the home copying of recordings. To maximize the benefits to all parties, the AHRA “solution” should be improved by amending the act so there is a mechanism for adjusting the royalty rates on digital recorders and blank digital recording media.
Pre-1992 Background
Two significant factors led to the enactment of the Audio Home Recording Act. One of these was the shift in consumer audio technology from analog recording on records and tapes to digital recording, primarily on compact discs. That shift paralleled substantial growth in home recording, especially the copying of prerecorded records, tapes, and discs.
In 1973, the year after sound recordings became separate copyrightable works, pre-recorded cassette sales totaled only 15 million units, less than four percent of total album sales that year. Table 1 indicates that cassettes went from the least important format in 1973, to become the dominant format in 1988, only to fall to a distant second place in 1999. During that same time period the vinyl LP went from sales dominance to near extinction. Most importantly, the compact disc, introduced in the United States in 1983, became the dominant format by 1993, and by the end of the twentieth century sales of CDs outnumbered sales of cassettes by over seven to one. The clear preference of consumers for digital formats, primarily compact discs, is now a factor leading to the growth of home digital recorders and the “resurrection” of the AHRA.
Table 1 - Pre-Recorded Music Sales in the United States Manufacturer’s Shipments by Configuration (millions of units shipped)
| 1973 | 1978 | 1983 | 1988 | 1993 | 1998 | 1999 | 2000 | |
|---|---|---|---|---|---|---|---|---|
| Cassette | 15 | 61.3 | 236.8 | 450.1 | 339.5 | 158.5 | 123.6 | 76.0 |
| CD | 0.8 | 149.7 | 495.4 | 847 | 938.9 | 942.5 | ||
| Vinyl LP | 280 | 341.3 | 209.6 | 72.4 | 1.2 | 3.4 | 2.9 | 2.2 |
| 8-Track | 91 | 133.6 | 6 | |||||
| Total Album | 386 | 536.2 | 453.2 | 672.2 | 836.1 1008.9 1065.4 1020.7 | |||
Source: Recording Industry Association of America, Yearend Statistics (1987, 1995, and 2000)
The critical legal issue in the dispute over home copying of recordings was whether home copying was a copyright infringement by the copiers themselves, or by the manufacturers of the machines that made the copying possible. The recording industry had long complained about the impact of home recording/taping. A decade of both recording industry and independent studies confirmed significant economic losses due to home taping. A 1978 study found that twenty-one percent of the population (32 percent of record buyers) taped at home. In the early 1980s a Warner Communication study estimated home taping “losses” at $2.85 billion per year (if the home tapers had been purchasers of pre-recorded music instead). Of that figure, $1.5 billion represented the copying of recordings not already owned by the taper. 45 percent of the respondents said they taped to avoid purchasing. The study noted that a prime reason for the prevalence of home taping was that market penetration of home recorders had jumped from 39 percent in 1977 to 48% in 1980.6 Later studies in 1988 by the Office of Technology Assessment (OTA) and the Roper Organization also found home taping prevalent. The OTA study found that 37 percent of those over the age of 14 taped music at home. The Roper study found that 34 percent of respondents said that if they could not tape, they would not purchase the recordings in question. The remaining 66 percent said they would have purchased the recordings they taped. Based on that finding the Roper report estimated annual lost sales at 322,500,000 recordings.7 At the prevailing $ 9.98 list price of tapes in 1988,8 that would amount to lost sales of about $ 3.2 billion (assuming ten cuts per album). The International Federation of the Phonographic Industry (IFPI—the international trade organization for over 1400 record companies in 46 countries) urged a legislative fix to the
home taping problem, but predicted a “long and tortuous path.”9
The legislative history of the Sound Recording Amendment of 1971, which made sound recordings a class of copyrightable works, indicated that home taping was considered a permitted use. The House Report noted:
Specifically, it is not the intention of the Committee to restrain the home recording, from broadcasts or from tapes, or records, of recorded performances, where the home recording is for private use and with no purpose of reproducing or otherwise capitalizing commercially on it. This practice is common and unrestrained today, and the record producers and performers would be in no different position from that of the owners of copyright in recorded
musical compositions over the past 20 years.11
The 1976 Copyright Revision Act did not specifically address the question of home taping. The only significant comment in the major legislative history of that Act appears in the Senate Report. That comment was addressed to the question of off-the-air home recording and was really more of a demurrer than a comment: “The committee does not intend to suggest, however, that off-the-air recording for convenience would under any circumstances, be considered fair use.”12
Both sides claimed victory in the wake of the 1984 Supreme Court “fair use” decision in Sony Corp. v. Universal City Studios, Inc.13 The “right to tape” advocates claimed that the Court’s decision that Sony’s Betamax video recorder did not itself infringe copyright, legitimized home audio taping in the same manner as it had home video taping of broadcast television programs. The copyright owners, on the other hand, noted that the Court specifically expressed “no opinion” on the audio recording question,14 and they argued that time shifting broadcast video programs was necessarily different from copying non-broadcast audio recordings.15 The exemption provisions of the AHRA supposedly put that debate to rest.
By the time of the AHRA’s enactment, the focus of the copyright owners had become digital reproduction systems. Digital Audio Tape (DAT) recorders were finding their way into the U.S. gray market by 1988 but had been kept out of the main consumer market by threat of litigation from copyright owners. Digital home recording meant that each copy could be a perfect replica of the original without any degradation of sound quality. Each serial copy (a copy of a copy of a copy …) would be just as “perfect” as the source material from which the first copy was made. That, said the copyright owners, made digital home recording much more of a problem than analog home recording.16 In 1989 the manufacturers and copyright owners reached an agreement to include a serial copy management system in the players/recorders,17 and the first legitimate consumer DAT machines finally hit the
U.S. market in 1990.18 Even then, very few pre-recorded DAT products were available. Most major labels only supplied some classical titles and some independent labels such as GRP released some jazz titles.20