Home Taping Industry Hits ‘Royalty’ Plan

Tape recording manufacturers clashed with representatives of the music industry Wednesday at a Senate subcommittee hearing on proposed legislation to levy a “royalty” fee on the sale of tape recorders and blank audio cassettes.

The manufacturers, joined by owners of electronics stores, opposed the bill, which they said would drive up the price of tape equipment for consumers. They asserted that the growing availability of portable personal stereo equipment is increasing sales, to the benefit of the music industry.

But music industry representatives claimed that a “royalty” fee would be the only way to compensate musical performers, songwriters, record companies and other copyright holders for sales that they say are being lost as a result of developing technologies that enable consumers to tape such works in their homes.

The bill would levy a fee of between 5% and 25% on home tape recorders at the wholesale level and a 1-cent-per-minute charge on blank audio cassettes. It is estimated that such a fee would generate about $200 million annually, which would, it is proposed, be channeled through a federal agency to the recipients.

According to Jack Battaglia, general manager of Memtek Products, a subdivision of Tandy Corp., many consumers tape not to “avoid purchasing an album but because taping is the best, and sometimes only, way to get a quality cassette of a musical work.”

But Stanley Gortikov, president of the Recording Industry Assn. of America, bitterly pointed out that sales ads for blank tapes often promote the idea that taping albums saves money. The bill’s opponents, however, skirted the issue of whether taping of albums to avoid buying them should be discouraged.

Under the bill, blank tape prices would climb by an average of 74%, according to the calculations by Battaglia, who said such increases would cause sales to decline.

Loss of Album Sales

But home taping is already resulting in the loss of album sales amounting to as much as $1.5 billion annually, according to Sen. Charles McC. Mathias (R-Md), the bill’s sponsor and chairman of the subcommittee on patents, copyrights and trademarks, which conducted Wednesday’s hearing.

Representatives of the music industry repeatedly declined to be specific as subcommittee members pressed them for financial figures. But opponents of the bill gladly pointed to press accounts of earnings reports filed last year by companies such as CBS Records, RCA Records and Warner Communications’ music group.

“The record companies clearly are not hurting,” Battaglia said. “But they see an opportunity and they’re going for it. They are trying to take a kernel of an argument--that some people sometimes make copies of their records--and parlay that point into a windfall of hundreds of millions of dollars.”