All of that changed when Sony debuted a little thing called Betamax. It let you record the shows you weren't watching and save them for later. While it was a huge boon to couch potatoes, it troubled big content producers who worried people were going to start pirating their work. So they did what any large incumbent generally does when faced with a threat: They took Sony to court.
Thirty years ago Friday, that case was finally decided by the highest judicial body in the land. And from it emerged a whole slew of technologies we take for granted now: TiVo, CD and DVD burners. The whole video-rental industry. It's hard to understate how important this case was from an intellectual property standpoint. And it's still being invoked today.
What was Betamax?
It's almost impossible to write about old media formats without sounding like a grizzled grandpa. If you're old enough to remember Betamax, I apologize. And if you're too young to remember — I also apologize.
Betamax was the precursor to all those tapes people lovingly perused at Blockbuster, back when there still was a Blockbuster. It came in a little stubby cassette with a single plastic window that you looked through to see how much tape was left.
To play its contents, you stuck it in a machine that unwound the magnetic tape and read what was on it. But what was special about the machine wasn't the playback function, Sony said. It was that you could also take what was on your television screen and put it on the tape.
"Sony Betamax videocassette recorder: Destined to be a superstar in your home entertainment scene," read one 1976 ad for the device in The New York Times. "Even if you’re not there, it records TV programs you don’t want to miss — builds a priceless videotape library in no time."
In today's dollars, the first version of the VCR cost more than $5,300. Not even Apple sets its starting prices that high. Yet people willingly paid for it, which got the executives at Disney and Universal very worried. People who recorded television shows and movies were violating copyright laws, they argued.
On Veterans Day, 1976, the two content companies filed a lawsuit against Sony, the maker of Betamax. It alleged that Sony was liable for any copyright infringement that its customers may have engaged in, and demanded that Sony pay up.
The lower court initially ruled in Sony's favor. When Universal and Disney appealed, the appellate court reversed the district court's judgement and awarded the content studios. But then the case rose to the Supreme Court — which is when things got really interesting.
An unlikely voter
Justice Sandra Day O'Connor didn't set out to be the swing vote. According to archival files, O'Connor was inclined at first to side with the studios along with a majority of her colleagues. But the files also show that O'Connor grappled with the majority opinion — so much so that she wound up defecting and supporting what was supposed to be the dissent. Her move effectively turned a 5-4 decision against Sony into a 5-4 ruling for it.
A key question in the case was whether copying content for home use constituted infringement. A handful of justices, led by Harry Blackmun, said it was. The 1976 Copyright Act laid out specific exemptions, Blackmun argued, and the use of VCRs to record TV shows was not one of them. That meant recording things to tape was a violation of copyright law, and by knowingly making it possible, Sony was liable for contributory infringement. He added that the fair use doctrine wasn't enough to protect taping TV and movies, because fair use had to produce public benefits and recording something just so you could watch it later by yourself didn't qualify. An "unproductive" reproduction might be acceptable, Blackmun granted, if the copier could prove there was no potential harm done to the content producer.
O'Connor agreed with pretty much everything that Blackmun said — but not all of it. She thought that under Blackmun's approach to fair use, copyright holders could win too easily by claiming potential harm and then producing ambiguous evidence. The standard needed to be higher.
Blackmun, meanwhile, wanted to reverse the district court's previous finding that Betamax had not harmed the content studios. To him, the absence of harm wasn't as clear as the lower court suggested, and ambiguity was not an excuse to give Sony a pass. Getting this right was important, because it potentially gave one side a lot more leverage over the other, as Jessica Litman, a University of Michigan law professor, wrote in 2005:
For Blackmun, what was crucial was that the law not require copyright owners to prove actual harm when a new technology was at issue, because that would require them to wait to seek relief until too late.
Blackmun agreed to make some revisions, and O'Connor continued to raise objections, until Blackmun appeared to put his foot down.
"Under your proposal," Blackmun wrote, "the copyright owner would have to prove actual harm to the value of the copyright or to a potential market even for unproductive uses."
Meanwhile, another justice had been toiling away on a different opinion — and now he sought to woo O'Connor's vote. John Paul Stevens was for ruling in Sony's favor, pitting him against the majority and making his the dissenting vote. Originally, Stevens had wanted to rule outright that home copying did not constitute copyright infringement. Gradually, though, other members of the court convinced Stevens to moderate his stance, and now he included some revisions to his opinion reflecting O'Connor's complaints with Blackmun, as well. O'Connor now felt that Stevens's opinion was much closer to her own, and switched sides.
The final decision held that while commercial copying would "presumptively be unfair," taping a TV show or movie for non-commercial, personal use would not be. In lawsuits alleging infringement, defendants would no longer have to prove the absence of harm to meet the fair use standard. And Sony could not be held liable if copyright infringement was just one of many possible uses for the Betamax product.
Had Blackmun moved a little further to meet O'Connor's demands, it might've resulted in the opposite outcome — potentially kneecapping the VCR right then and there, though by that point the technology may have been in as many as 9.5 million U.S. households, according to Sony's estimates.
Ironically, Blackmun could also have gotten his way if he'd voted not to hear the case in the first place.
"Had Justice Blackmun opposed the petition, it would not have been granted, and the Ninth Circuit's holding would have remained intact," wrote the legal scholars Jonathan Band and Andrew McLaughlin in a 1994 study of the Court's papers. "Although Justice Blackmun probably supported the petition because he thought that the Supreme Court would affirm the Ninth Circuit, it proved to be a dangerous strategy."
A Betamax redux?
The decision in Sony v. Universal Studios meant that home copying was legal. So was the technology behind it. That's almost more important, because VCRs didn't just let you record your favorite shows for later. They allowed users to become amateur filmmakers. They also allowed the viewing of tapes that other people had made.
As Hollywood soon learned, that would become vitally important. VHS sales and rentals grew into a huge revenue stream for the movie business, and it's why you still have a hard time finding newer content on streaming services today. Studios continue to find it more lucrative to stretch out DVD sales for as long as possible before putting the same content on cable or on the Internet, both of which are seen as lower down on the food chain. Physical media still account for the overwhelming share of the studios' annual revenues. Such is the legacy of the VCR.
Its latter-day cousin, the DVR, was labeled (favorably) "God's machine" by a chairman of the Federal Communications Commission in 2003. Being able to record shows and sports — without commercials! — was a terrifying prospect to TV broadcasters, who feared advertising money would start drying up.
TV stations have since found another revenue stream in the cable companies that pay money to carry broadcast content. (Except when the cable companies balk, which is how Time Warner subscribers got the big CBS blackout of 2013.) But some say broadcasters' revenue fears are being rekindled as newer technologies such as Aereo have begun making TV signals available over the Internet — and for free, without paying the retransmission fees that cable companies do.
Gary Shapiro is the CEO of the Consumer Electronics Association, which represents Aereo. In an interview, Shapiro momentarily put himself in the shoes of the broadcasters.
"'If the cable company is paying us for this signal and Aereo is not, we're not going to make the money we used to,'" he said.
The TV industry has been suing Aereo wherever it's tried to land — New York, Boston, Utah. Last week, the Supreme Court agreed to consider a case against Aereo from the Second Circuit Court of Appeals, in New York. Aereo invited the Supremes to rule on its case despite having emerged victorious in the Second Circuit, presumably so that it doesn't have to keep fighting state by state.
Dennis Wharton, a top spokesman for the National Association of Broadcasters, argued that TV stations have nothing against new technology and that they're simply asking for rightful compensation.
"There’s a difference between encouraging innovation and enabling the theft of content," said Wharton. "Our friend Gary Shapiro sometimes appears not to be aware of that distinction.”
Whether we're actually talking about theft, or something else, is up to the court to decide. Chances are, its justices are going to look very closely at the Betamax decision when they do.