Compromise Reached on Digital Audio Tapes : Recording Industry, Electronics Firms Agree to Place Device in Machines to Prevent Some Copying

The long-running battle between Japanese electronics manufacturers and the recording industry over the sale of digital audio tape recorders has produced a compromise agreement that sources said Tuesday may be the first step in opening the way for introduction of the controversial product in the United States.

Digital audio tape is basically a cassette version of the popular compact disk, offering the same near-perfect sound reproduction from digital recordings. But, unlike a CD, a DAT cassette may be used to record as well as play. For that reason, DAT has been strongly opposed by the major record companies, which claim it will cost them untold millions in lost sales due to home taping and counterfeiting.

Record industry sources say the agreement--which was hammered out in meetings in Athens last month--involves the endorsement by both sides of a device to be placed in all DAT recorders that will allow consumers to make copies of compact discs, analog tapes or records on digital tape, but they would not be able to copy another digital tape. The anti-DAT copying device was developed by Dutch electronics giant Philips NV.

A spokesman for the Recording Industry Assn. of America--the Washington-based lobbying group of the major record companies that has fought against DAT for three years--declined to comment, adding that the association will make an announcement Friday.

In an effort to keep DAT out of the U.S. market, the record companies have lobbied Congress to ban the sale of DAT machines that lack a microchip to prevent all recording, and have asked that a tax be levied on the sale of blank DAT cassettes to make up for lost royalties on copying.

The recording companies have also refused to license their music for use on prerecorded DAT cassettes. That refusal has effectively prevented DAT from catching on in this country.

Fear of DAT Called Anti-Consumer

Several electronics companies have begun selling DAT players here, but without recording capability. Experts say only about 60,000 DAT recorders have been sold worldwide to date, most of them in Japan.

“It was the first time the record industry banded together and said no,” said one executive. “And it worked. DAT hasn’t been a big seller anywhere.”

The record industry’s fear of DAT possibilities has been widely criticized as exaggerated and anti-consumer. Record executives, however, have said the machine is a threat to the very life of their industry and their ability to protect copyrights.

Sources in the electronics industry already are touting the agreement as an end to the war between the machine makers and the music makers. However, record executives are describing it as merely an uneasy cease fire.

“We’re sullen but not mutinous,” said one record company president who asked not to be identified. “The reason (the agreement) was done is so that we are in a position to take on the next wave of technology, which is the recordable CD. Now the electronics industry has acknowledged for the first time that home taping is a problem.”

Still Much to Do

The company president said the fight is far from over and “I don’t believe you’ll see the effect for a couple of years. We still have to get laws passed saying that no recorders without this device will be allowed in the country. And we’re still going after a tax on the tape,” he said.

Only then will the companies agree to license their music for use on DAT cassettes, he said. “Each company has to decide on its own, and some may not do it.”

RCA Records President Bob Buziak thinks the industry may have gone too far in the compromise. “I don’t know if it accomplishes anything,” he said. “What’s to prevent someone from taking 10 DAT machines, linking them to one compact disc machine and mass-producing copies?”

“Clearly, it’s an accomplishment if the manufacturers of the technology have agreed to do something, and have admitted that taping is a problem and they recognize it. Hopefully, it will be the beginning. But I still think it’s a non-victory for us.”

Asked if he would license his company’s music for use on DAT, based on the details of the agreement that have emerged so far, Buziak said, “Absolutely not.”