The Supreme Court has postponed making a decision on the "Betamax" case. The Post, in its July 7 editorial, "Video Outlaws?" correctly urges Congress to act now to resolve the copyright and public policy issues that relate to video recorder technology. The Post errs, however, in advising Congress to pass quick-fix legislation that would harm those who create motion pictures and television programs, would be anti-consumer and would provide electronic and tape manufacturers with a multi-billion- dollar bonanza at the expense of our constitutionally mandated copyright system.
Congress cannot hide from the major implications of the videocassette recorder:
When people tape programs, they adversely affect the value of creative property whose economic worth derives from the right of the property owner to control when, how and who views his creation.
* When Universal and Disney sued Sony for copyright infringement, there were only 30,000 VCRs. By the end of this year there will be 9 million. By 1990, VCRs will be in 40 to 50 million American homes generating massive amounts of taping.
* When people tape programs for later viewing, they eliminate commercials by using devices designed for that purpose. Advertisers have stated they will reduce substantially the rates they pay networks and local stations when viewers "zap" their commercials in this way.
* The expected decline in advertising revenue from mass commercial-"zapping" will result in a sharp reduction in revenue to the companies involved in the very high-risk business of making movies and television programs.
* If a movie is taped in the home, a videocassette recording of that work is not rented or purchased at the local video store, eroding another revenue stream necessary to recapture investment.
The consequences of these factors create a political and policy dilemma for Congress. We could just pass legislation that ignores totally the property rights of copyright owners by exempting home recording from copyright infringement--and do nothing more. Or we could exempt home recording from copyright infringement and devise a fair and reasonable royalty system on videocassette recorders and blank videotape so that the men and women who produce creative products are compensated when their property is used.
The first course is politically alluring and is urged on us by VCR and tape manufacturers, who are trying to protect their profits.
But this course has serious implications for consumers and for an important American industry. Without some reasonable system of royalty compensation, the erosion of revenue streams on which motion picture production depends will mean fewer high-quality pictures produced in this country.
Just as important: without some form of royalty system, quality motion pictures will be taken off commercially supported television, from which they are taped. This means that those Americans who can't afford or don't have access to pay and cable TV, or can't afford to take the family to the movies, will be deprived of the type of "free" entertainment they now get. This could be as many as one-half of all American homes. But tape and VCR manufacturers don't seem to care about the future of free television.
Who should pay the royalty? It should be paid by those who stand to benefit economically from home taping, in proportion to their gain. This means that manufacturers of the machines and tape should be required by law to pay a copyright royalty for the privilege of selling their products. This concept is a well- established practice in our copyright system and has guaranteed a flow of ideas and creations for the public's benefit since the founding of our nation.
Moreover, the ferocious price competition in the marketplace will make it difficult for manufacturers to try to pass through a significant portion of the royalty to the retailer, and thus only a small portion of the royalty fee may be passed on to consumers, at least in the short term. But as a strong consumer advocate, I'm not afraid to say the consumers who receive something of value should pay for it.
The manufacturers are trying desperately to convince Congress that, if consumers must pay anything to record and perhaps keep a copy of "Mary Poppins," they are being abused. It's sad when consumerism is manipulated for the enrichment of one industry at the expense of another.
Who would have access to a royalty pool? Here again the VCR and equipment manufacturers would have Congress believe that a royalty system would support rich Hollywood movie stars. The facts are otherwise. Large and small production companies, members of unions and creative guilds all across America would be the beneficiaries of a royalty system, some of them on the basis of negotiated bargaining with their employers. By the way, unemployment in the entertainment community is substantially above the national average.
The Post asserts that copyright protection "properly applies only to commercial use." This statement is both legally incorrect and bad public policy. Our copyright laws properly protect all creations of the intellect, whether they have commercial value or not. The fact that taping occurs in the home shouldn't divert us from recognizing that such behavior will soon occur in 50 million living rooms and this will materially affect the economic viability of the motion picture and television production industries.
How should Congress resolve the Betamax dilemma? The battle between VCR and tape manufacturers and the motion picture industry has gone on too long. We need a truce. We need a compromise so that Congress can act and we can move on to other important issues.
I understand that efforts were made last year by the motion picture industry to approach privately the VCR manufacturers to see whether agreement could be reached on legislation. The manufacturers said "no deal" because they thought they could win in the Supreme Court and perhaps in Congress.
The time has come for those who make VCRs and tape to come to the table in good faith and begin talking with representatives of the American creative community. This is a sensible way to resolve this problem and pave the way for a fair congressional solution.