S. HRG. 101-890 DIGITAL AUDIO TAPE RECORDER ACT OF 1990 HEARING BEFORE THE SUBCOMMITTEE ON COMMUNICATIONS OF THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED FIRST CONGRESS SECOND SESSION c ON S. 2358 ENTITLED THE DIGITAL AUDIO TAPE RECORDER ACT OF 1990 JUNE 13,1990 Printed for the use of the Committee on Commerce, Science, and Transportation VS. GOVERNMENT PRINTING OFFICE 33-293 O WASHINGTON : 1990 Far sale by the Superintendent of Documents, Congressional Sales Office VS. Government Printing Office, Washington. DC 20402 COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ERNEST F. HOLLINCS, South Carolina, Chairman DANIEL K. INOUYE, Hawaii JOHN C. DANFORTH, Missouri WENDELL H. FORD, Kentucky BOB PACKWOOD, Oregon J. JAMES EXON, Nebraska LARRY PRESSLER, South Dakota ALBERT GORE, JR., Tennessee TED STEVENS, Alaska JOHN D. ROCKEFELLER IV, West Virginia ROBERT W. KASTEN, JR., Wisconsin LLOYD BENTSEN, Texas JOHN MCCAIN, Arizona JOHN F. KERRY, Massachusetts CONRAD BURNS, Montana JOHN B. BREAUX. Louisiana SLADE GORTON, Washington RICHARD H. BRYAN, Nevada TRENT LOTT, Mississippi CHARLES S. ROBB, Virginia KEVIN G. CURTTN, Chief Counsel and Staff Director WALTER B. MCCORMICK, JR., Minority Chief Counsel and Staff Director SUBCOMMITTEE ON COMMUNICATIONS DANIEL K. INOUYE, Hawaii, Chairman ERNEST F. HOLLINGS, South Carolina BOB PACKWOOD, Oregon WENDELL H. FORD, Kentucky LARRY PRESSLER, South Dakota ALBERT GORE, JR., Tennessee TED STEVENS, Alaska J. JAMES EXON, Nebraska JOHN MCCAIN, Arizona JOHN F. KERRY, Massachusetts CONRAD BURNS, Montana LLOYD BENTSEN, Texas SLADE GORTON, Washington JOHN B. BREAUX, Louisiana (ID C ONTENTS Page Opening statement by Senator Inouye 1 Opening statement by Senator McCain 2 Opening statement by Senator Gore 3 Opening statement by Senator Burns 5 Opening statement by Senator Breaux 6 Text of S. 2358 7 LIST OF WITNESSES Berman, Jason, president. Recording Industry Association of America 81 Prepared statement 85 DeConcini, Hon. Dennis, U.S. Senator from Arizona 25 Feldman, Leonard, Leonard Feldman Electronic Labs 157 Prepared statement 159 Friel, Thomas P., chairman, Home Recording Rights Coalition 114 Prepared statement 116 Greenspun, Philip, president, Isosonics Corp 169 Prepared statement _ 173 Holyfield, Wayland, AMI Music Publishing, Inc 249 Kondo, Kevin, general manager, Honolulu Audio Video 147 Prepared statement 149 Murphy, Edward, president and CEO, National Music Publishers Assn., Inc 196 Prepared statement 200 Oman, Ralph, Register of Copyrights, Library of Congress; accompanied by Dorothy Schrader, General Counsel; and Charlotte Givens, Senior Attorney 28 Prepared statement 31 Smith, Michael, president, SJS Advanced Strategies 245 Weiss, George David, on behalf of the Copyright Coalition 227 Prepared statement 229 Wilson, George, director of systems integration, Stanley Associates 252 ADDITIONAL ARTICLES, LETTERS. AND STATEMENTS Bright, Sol K., letter 273 Carroll, Michael C, letter 264 Carter, Milton H., Jr., prsident. Musicians' Association of Hawaii, letter 281 Emerson, J. Martin, president, American Federation of Musicians, letter 279 Glasel. John, president. Associated Muscians of Greater New York, letter 271 Hebner, Robert E., Acting Deputy Director, Center for Electronics and Electrical Engineering, Department of Commerce, letter 263 Karl, Douglas J., president. Audio Digital Systems, Inc., letter 276 Shumway, Jerry and Kyle Plank, letter 269 ran DIGITAL AUDIO TAPE RECORDER ACT OF 1990 WEDNESDAY, JUNE 13, 1990 U.S. SENATE, Committee on Commerce, Science, and Transportation, SUBCOMMITTEE ON COMMUNICATIONS, Washington, DC. The subcommittee met, pursuant to notice, at 9:30 a.m. in room SR-253, Russell Senate Office Building, Hon. Daniel Inouye (chair­ man of the subcommittee) presiding. Staff members assigned to this hearing: Toni Cook and Tom Cohen, staff counsels; Gina Keeney and William Heyer, minority staff counsels. OPENING STATEMENT BY SENATOR INOUYE Senator INOUYE. This morning we meet to consider S. 2358, the Digital Audio Tape Recorder Act of 1990. This bill, the so-called DAT bill, was introduced by Senator DeConcini, who is with us this morning. It raises the fundamental issue of whether we should focus copyright matters on certain technologies or view them as a whole. Three years ago this subcommittee convened to hear the merits of S. 506, the Digital Audio Recorder Act of 1987. That bill did not move because more work was needed on the technological solution to serial copying. It was also decided that it would be beneficial if the involved parties were to meet to iron out their differences prior to bringing the matter before Congress. We thought that progress had been made and that S. 2358 reflected this progress. However, first we learned, that the music publishers and song­ writers oppose this bill, and just yesterday we learned that two of the bill's supporters have concerns about a new technology, digital compact cassettes, and that the recording industry would like to conduct further negotiations on this matter. Consequently, I strongly urge the parties at the completion of this hearing to try to work out their differences. If a compromise is not reached then, it will be extremely difficult for any bill on this issue to move for­ ward this year. The measure before us today, S. 2358, prohibits the manufacture or distribution of digital audio tape recorders in the United States that do not meet the specifications set forth in the bill or standards approved by the Secretary of Commerce. Specifically, the bill would require that all digital audio tape recorders sold in the United States be equipped with serial copy management systems circuitry chips. The SCMS technology will allow first generation copies of prerecorded materials but would not allow succeeding generation (l) 2 copies. In short, this technology limits serial copying, which is of great concern to a great deal of people in the music industry. This measure implements only a technological fix and does not address the illegality of private home taping or the issue of royalty pay­ ments. I look forward to hearing from all the witnesses that have gath­ ered this morning to speak on this bill. First, we will hear from the Registrar of Copyrights, Mr. Ralph Oman. After that, we will hear from the supporters of S. 2358, Mr. Jason Berman, President of the Recording Industry Association of America; Mr. Thomas Friel, Chairman of the Home Recording Rights Coalition; Mr. Kevin Kondo, General Manager of Honolulu Audio Video; and Mr. Leonard Feldman of Leonard Feldman Elec­ tronic Labs. Then we will listen to the testimony of Mr. Philip Greenspun, President of Isosonics Corporation; Mr. Edward Murphy, President and Chief Executive Officer of the National Music Publishers Asso­ ciation; Mr. George David Weiss, President of the Songwriters Guild of America; Mr. Michael Smith, President of SJS Advanced Strategies; Mr. George Wilson, Director of Systems Integration of Stanley Associates; and Mr. Wayland Holyfield of AMI Music Pub­ lishing. On behalf of the committee, I thank all of you for taking time out today to discuss this matter. Senator McCain. OPENING STATEMENT BY SENATOR McCAIN Senator MCCAIN. Mr. Chairman, I appreciate your holding this hearing today. I think it is a very important hearing. As you just stated, it is an incredibly complex issue that we are addressing. I am very appreciative of the efforts of my friend and colleague from Arizona, Senator DeConcini, who has made an honest and good faith effort in trying to resolve an incredibly complex issue. I wonder how many years ago we would have been astonished at seeing a device like this which is capable of almost exact replica­ tion of the original and the fact that, as you stated, Mr. Chairman, there seems to be now some reservations on the part of some of the parties driven by the even newer technology being entered into this already incredibly complex issue. I also think that it is important, Mr. Chairman, that the song­ writers and musicians who will be represented here today have their place at the table. I think they have a right to, and I know that all of us would look forward to hearing what they have to say. Sometimes, Mr. Chairman, I feel a little bit like those that were alarmed at the invention of the automobile as opposed to the horse and carriage regarding the implications that it had for America and for the way that we did business. Clearly, this is not just an isolated example of the challenges and dilemmas that we are pre­ sented with as technology improves. So I certainly look forward to hearing from the witnesses today. Again, I would like to thank my friend, Senator DeConcini, who has spent many, many hours on this very difficult and complex problem. 3 Thank you, Mr. Chairman. Senator INOUYE. Thank you, Senator McCain. Senator Gore. "' OPENING STATEMENT BY SENATOR GORE Senator GORE. Thank you, Mr. Chairman. I do have an opening statement, but I would be happy to defer to Senator DeConcini to • present his statement first. Mr. Chairman, I want to thank you, first of all, for developing this hearing. I believe you have probably handled the toughest, most controversial issues that have come to the Commerce Com­ mittee this year. I know last week was pretty controversial. Senator INOUYE. I need a pay raise. Senator GORE. Well, there is another controversial issue right there. As you know, over the past decade, Mr. Chairman, I have been deeply involved in issues affecting the taping of recorded music. The issue has always been fairly simple: Should new technology, in this case the digital audio recorder, undermine the rights of song- •-^writers, performers, publishers and record companies to be compen­ sated for their work? I believe most of us would agree that technol­ ogy should not rob artists of their property. How should we insure that the creative community is indeed compensated and compen­ sated fairly? You can go anywhere in the world and turn on a radio, and the odds are you will be hearing an American song.