Sen. Howard Metzenbaum (D-Ohio) told the music industry yesterday to back up its claims that most record companies are suffering financial losses or risk losing the fight for its top legislative priority -- a bill that would impose a royalty fee on home tape recorders and blank audio cassettes.
Testifying before a standing room only crowd of industry lobbyists, Stanley M. Gortikov, president of the Record Industry Association of America, told a Senate subcommittee yesterday that confidential data showed that a "majority" of record companies had lost money last year because consumers are increasingly taping music albums in their homes rather than buying them.
But Gortikov's data was immediately challenged by Metzenbaum, who cited figures and public statements by some of the country's largest record companies, including CBS Inc. and Warner Communications Inc., showing that their record divisions enjoyed unprecedented profits in 1984.
When Gortikov said specific company-by-company figures were confidential and therefore could not be disclosed, Metzenbaum shot back, "What's so secretive about whether a company made or lost . . . money?
"I tell you, your case is substantially weakened without submitting your figures," Metzenbaum said.
The level of record company profits has become a central issue in the congressional debate over home taping. Music industry officials, deploying well-known performers as lobbyists, have been pushing Congress to enact legislation that would impose a royalty fee of between 5 and 25 percent on home tape recorders and a penny-a-minute charge on blank audio cassettes.
Proceeds from these fees, estimated at about $200 million a year, would then be distributed by the U.S. Copyright Tribunal to record companies, performers, song writers and other copyright holders to reimburse them for the revenue lost because of home taping.
But opponents, including retail electronic stores and the Japanese manufacturers of tape recorders, have denounced the legislation as an unjustified "taping tax" that would only enrich successful performers and already profitable record companies, which reported an all-time high of $4.5 billlion in sales last year.
CBS Records reported that it earned $123 million in 1984 on revenue of $1.27 billion, while Warner Communications and RCA both reported their record divisions enjoyed their highest profits ever last year, according to trade press reports cited by Metzenbaum.
Carol Tucker Foreman, a former president of the Consumer Federation of America who has been retained by manufacturing companies opposing the bill, said the legislation also would ensure copyright royalties to "a music publishing tycoon" like pop star Michael Jackson, who has purchased the rights to most of the songs written by ex-Beatles John Lennon and Paul McCartney