WHAT’S DAT? AUDIO INNOVATION THAT CLOUDS CD FUTURE

Compact discs are the new darlings of the record industry, but for how long?

CDs already claim nearly 25% of every dollar spent on recorded music, and industry forecasters have been predicting for months that the real boom is still ahead.

But many record company executives are worried about a dark cloud on the technology horizon--a new Japanese audio innovation that has been described by Popular Science magazine as “the recording system of the future.”

The debate centers around digital audio tape, known as DAT. The new DAT prototypes have been on display at consumer electronic conventions in recent months. While DAT isn’t expected to reach the marketplace until at least late next year, battle lines are already being drawn.

Nervous that this new system could possibly derail the booming CD market, industry executives are blasting the Japanese-dominated audio equipment industry, claiming that the audio titans are, in effect, plotting the “assassination” of the American music industry.

“DAT is a very ominous threat to the record industry,” Stanley Gortikov, president of the Recording Industry Assn. of America, said in a phone interview with The Times.

“It may be a technological advance, but it also represents a license to steal our copyrighted recordings. It would harm record sales and make piracy and counterfeiting far more attractive.”

Charles D. Ferris, a former chairman of the Federal Communications Commission who is serving as counsel to a coalition of Japanese audio manufacturers and U.S. electronics firms, countered by saying that the U.S. record industry is “simply trying to protect the exorbitant profits it’s making from CD sales.

“The real issue here is plain and simple economics. They’d want to keep DAT out of the country until CD sales have run their course. But the people who are going to be hurt are the American consumers.”

DAT isn’t compatible with present audio formats, and DAT players will be considerably more expensive than CD players. They are expected to retail initially for “about” $1,000 (CD players can now be bought for less than $200), but they offer some promising consumer features.

About two-thirds the size of an audiocassette, DAT is supposed to offer the same stellar digital sound quality that has made CDs so popular. The new tapes can be played on casette decks smaller than present models--and they allow consumers to make exact duplicates of music copied from other sources.

The latter feature is what most concerns the record industry.

Armed with DAT, consumers could make copies of a CD recording without the loss of sound quality that occurs with current taping systems. One reason the record industry loves CDs is that--unlike tape--consumers can’t record on them.

DAT’s Xerox-like audio-copying process, industry spokesmen say, could lead to a dramatic rise in home taping, which could deprive the record industry of a significant percentage of new sales.

“The prospect of home taping with DATs frankly appalls me,” Gortikov said from Vancouver, B.C., where he is attending a conference of U.S. record industry leaders and Japanese audio equipment executives. “It would make every owner of a DAT machine into a junior music factory, able to not just copy music, but literally clone it.”

The record industry association is spearheading a record industry campaign calling for the inclusion of a “copy-code” chip in DATs that would prevent consumers from taping directly off CDs, albums or any tapes. Gortikov added that the industry will seek the introduction of legislation in Congress next year that would support the mandatory inclusion of anti-taping devices in DATs as well as any other new audio technology.

Gortikov said the Vancouver conference is designed to encourage Japanese corporate support for such legislation, though he acknowledged that he is “pessimistic” about winning cooperation from the audio manufacturers.

DAT spokesman Ferris scoffed at claims that widespread proliferation of DATs would lead to an enormous increase in home taping.

“That’s a lot of baloney,” he said. “These guys are always trying to shoot themselves in the foot. The industry has never been able to document that home taping does any real harm to business. After all the uproar over the past five years about home taping with audio cassettes, their business is flourishing. So where’s the damage?

“It’s the same paranoid rhetoric you used to hear from the film industry, who claimed that VCRs would kill off the Hollywood studios. It’s turned out that VCRs are the best friend Hollywood ever had. They’ve given the studios an enormous new revenue stream.”

Gortikov took issue with Ferris’ film-industry analogy. “The motion picture business has survived VCRs because they have many different potential income streams,” he said. “We have only one source of income--our product. And when sales are displaced, there’s no alternative source of income.”

Other industry leaders support Gortikov’s charges. “There’s no way to stop new advances, whether they come from science, or medicine or audio technology,” explained A&M; Records President Gil Friesen. “But if (DAT) encourages more home taping, it’s going to put our industry into real jeopardy.”

Not every industry leader is convinced that DAT will even emerge as the next big audio advance. Russ Solomon, president of the California-based Tower Records retail store chain, predicts that DAT will have its biggest impact as an “esoteric” audiophile device.

“My feeling is that it’s going to take a big nose dive before it even gets across the Pacific,” he said.