- 21 It is important to bear in mind that the economic impact of home taping is ultimately also borne by the consumer. Because home taping reduces sales volume, there are fewer albums over which the costs of production can be spread. This can force up the price of the records that are sold. Thus, in effect, those who buy records pay more so that those who tape off-the-air or from borrowed records can pay nothing. While Additionally, widespread home taping has a negative impact on the Nation's balance of trade. most taping equipment and blank tapes bought in the United States are imported (principally from Japan) or produced by foreign-controlled interests, American music has long had a positive effect on our trade balance. We have traditionally exported about three times more phonograph records and other sound recordings than we have imported.11/ And our performance royalty receipts from foreign countries are more than three times the payments we make to copyright owners abroad.12/ 11/ See, e.g., "U.S. Trade Shifts In Selected Commodity Areas, U.S. International Trade Commission Publication No. 1187, September, 1981. 12/ Based on ASCAP Financial Statement sent to ASCAP Members for the year ended December 31, 1980. This is because American music sets the standard for the world. But as home taping dries up the amount of capital needed to produce new recordings for sale abroad, the American music industry will contribute less to the U.S. balance of trade. Finally, widespread taping reduces the record companies' ability to release a large number and wide variety of new records to the public. Already, largely as a result of home taping, record companies are releasing fewer albums. In 1981, the industry released 32% fewer new albums than in 1978.13/ combined were down 248.14/ Moreover, companies are Singles and LPs signing fewer new artists and experimenting less with new music, which have traditionally been the lifeblood of the industry. Record-makers simply can no longer afford the risks of experimentation. A decline in new releases means that all American consumers (including the majority who do not tape) will no longer have access to the broad diversity of music that today meets varied consumer tastes and interests. 13/ RIAA 1981 Release Survey, April 1982. 14/ Id. 23 B. The Economic State of the Recording Industry The explosive growth of home taping could not have come at a worse time from the standpoint of the recording industry. The loss of $1 billion of revenues each year as a result of home taping, combined with other factors such as burgeoning record piracy and counterfeiting, has left the recording industry in fragile condition. After decades of consistent growth, the recording industry has suffered major setbacks in recent years. In 1979, for example, the industry had a loss of more than $200 million on its domestic sales. 15/ The impact of that year on the health of the industry was the subject of an article in New York Magazine: 15/ "After four years of spectacular sales "Record-company earnings have been falling, despite rising sales revenues. Albums that last year would have been expected to sell 2 million Economic Study of the Recording Industry, prepared by the Cambridge Research Institute (April 7, 1980). Comparable data do not exist for the years 1980 or 1981. copies are doing half that much this are alive with reports of new shakeups and layoffs. The downward trend since 1979 has not been reversed. While unit sales of premium blank tapes have been increasing, unit sales of records and pre-recorded tapes have been declining since that time at an alarming rate. Thus, the latest industry figures just released place total 1981 shipments of records and pre-recorded tapes at 594 million units. That figure represents 16/ "The Record Industry: Meltdown in the Wax Factories," New York, Aug. 13-20, 1979, at 10. Even the rare hits are selling in smaller numbers than they once did taped instead. 91 in large part because they are being The Chairman of A&M Records recently pointed out that an A&M production which won the award for best selling album in 1976 sold almost seven million copies in that year. Another A&M record which won the same award in 1979 sold just over four million copies and its current hit, which has been on "the top of the charts" as long as was its 1979 record, has not yet sold 1.7 million copies.17/ For the industry as a whole, manufacturers' net shipments in 1981 amounted to $3.6 billion, down substantially from the 1978 figure of $4.13 billion.18/ Needless to say, those declining figures are not based on any single factor. But no matter what explanations are offered, the extraordinary impact of home taping cannot be denied. In siphoning off nearly $1 billion in recording industry revenues, home taping undoubtedly has contributed to: 17/ Testimony of Mr. Jerry Moss before the House Judiciary Subcommittee on Courts, Civil Liberties and the Administration of Justice, April 14, 1982. 18/ Wall Street Journal, Feb. 18, 1972, at 31. |