In what could be a blow to Japanese companies that have supported the controversial digital audio tape format, the giant Dutch electronics firm N. V. Philips has developed a new machine that offers greatly improved sound from standard audio cassettes.
Philips officials, who have declined any public comment on the device, came to Los Angeles last week and quietly demonstrated the so-called digital compact cassette machine to officials of several major record companies in an effort to drum up music-industry support for the technology. The machine is scheduled to be available starting next year.
"It sounds very good; it's not as good as a CD (compact disc), but it's so much better than standard analog cassettes," said Al McPherson, chief engineer at Warner Bros. Records. McPherson added that Warner has not pledged its support for digital compact cassettes but is "very, very interested" in the new technology.
Experts say the machine may improve Europe's competitive position against Japan in consumer audio electronics and could rejuvenate sluggish sales of the beleaguered audio cassette, developed by Philips in 1963. Although cassettes now make up more than half of all pre-recorded music sales, unit sales fell in 1989 for the first time in the wake of competition from compact discs.
The Philips machine can record and play back standard cassette tapes in two ways: the conventional analog way, which electronically reproduces sound waves on tape, or the new digital way, which--like compact discs and digital audio tape--reproduces sound by relying on circuits that electronically convert a sound wave into a string of numbers. These numbers form a digital snapshot of the music.
The Philips machine could win more consumer and record industry converts because existing cassette tapes could be used to enjoy the improved sound of digital audio. What's more, cassette tapes are far cheaper and more widely available than blank digital audio tapes, which retail for more than $15.
"This product could take off," said Paul Gluckman, editor of Audio Week, a New York-based trade publication that has followed Philips' machine. Still, he said, Philips will eventually need the Japanese to help make the new format a long-term success.
Philips badly needs a hit product. Over the past five years the company has closed more than 75 factories and cut its work force by more than 40,000 in an effort to restructure its $31-billion operations.
But on Wednesday, Japan's Ministry of International Trade and Industry approved new standards for DAT machines manufactured in Japan. The new rules, which update previous DAT standards, give Japanese manufacturers the go-ahead to introduce DAT recorders at the Consumer Electronics Show, which opens Saturday in Chicago, manufacturers in Tokyo told the Associated Press.
American songwriters and the Recording Industry Assn. of America had tried to keep DAT technology out of the United States, fearing it would hurt record sales and lead to widespread home taping of compact discs. The RIAA has maintained that home taping costs the industry at least $1.5 billion annually in lost sales.
But the RIAA broke ranks with songwriters last year when they agreed to drop their opposition to DAT if equipment makers agreed to include a special copyright protection circuit in their machines and seek a federal law to require such protection.
The circuitry, known as the Serial Copy Management System, allows consumers to make direct copies of compact discs in unlimited quantities, but it prevents consumers from making tapes of them.
It is unknown whether Philips will include such a circuit in its digital compact cassette machines. But many industry observers believe that Philips should.
"They are acting in bad faith if they intend to market the machine without complying with the legislation," said an aide to Rep. Henry A. Waxman (D-Los Angeles), who is scheduled to hold hearings later this month on the RIAA compromise measure before the House Energy and Commerce Committee. "The fact that the machine also plays and records analog audio doesn't hide the fact that it's also a digital device," she said.
"The language of the bill is drafted pretty broadly to include all digital audio media," said David Leibowitz, general counsel at the RIAA in Washington.
George D. Weiss, president of the Songwriters Guild of America, which opposes the compromise DAT bill, said the guild will continue to seek a songwriters' royalty fund financed by a surcharge on DAT sales. What's more, Weiss said, the new Philips machine "merely points up the fatal flaw" in legislation that "doesn't adequately deal with brand new technology."