The Great Debate. Should a royalty be payable on blank cassette tape or not? In a new 2-part series we take a look at exactly what the Government is proposing on the subject in their new document 'Intellectual Property and Innovation.'

Something is wrong with the legal situation as it stands. Most people agree on this point, but what action to take, if any, is a subject of often quite heated disagreement. The fact is that home taping has grown into such a popular pastime that many more parties are now involved than ever before.

Just in case anybody is still unclear as to why the law will be changed, the basic argument is that those who tape commercially released recordings are not going to buy them, therefore those who made the original recordings are losing a potential sale. For example, you borrow a newly released album off one of your friends, take it home and tape it before returning it. You therefore receive access to the music without paying for the recording. As it stands, this practice is illegal, but the law that covers this area is unenforced, unenforceable and usually ignored. Because the practice is so widespread, no precise figures can be obtained to estimate the true extent of home taping.

So what exactly is the Government proposing to do about the matter? Well, let's take a more detailed look at the law as it stands. It's complicated, but basically it's like this...

We have the Technology

The technology that enables recordings to be privately copied at home has become both easily available and cheap. Nearly every home contains a cassette recorder of some kind. Often this will be part of a stereo system that might also contain a record player, radio, video, CD player or another tape recorder. However, it's not necessary to possess such a large system to tape at home. With the most basic cassette recorder, turntable and an appropriate lead, home taping becomes simple.

Under the 1956 Copyright Act, the copyright owners of video and audio material have the right to control the reproduction of that material. So, other people reproducing it at home onto a cassette most definitely falls outside this category.

But here a distinction emerges between the copying of video and audio material. Most video copying is done from the television and takes place because it is inconvenient to watch the programme at the time it was broadcast. The video copy will then stored in order to be watched at the consumer's convenience, usually only once. Then the same video cassette will be used again and again, with each new program recorded over the previous one. Audio copying, however, tends to take the form of home recorded cassettes intended for repeated listening, and it is this, rather than the 'time-shifting' use of video copying that the Government is seeking to penalise. After all, if you buy just one blank video tape and re-use it for every program you want to watch, you're no longer keeping any of the copies you're making. It is in fact analagous to borrowing a video from a video rental shop.

However, it must be remembered that the cost of video tapes is far higher than that of audio cassette tapes. If the price of blank video tapes fell to anything vaguely approaching that of their audio counterparts, who is to say that illegal home video collections would not become commonplace?

Machinations

In addition to the 1956 act, this area is also covered by the Performers' Protection Acts of 1958-1972. All these laws were examined by the Whitford Committee which duly reported its findings and in 1981 this lead directly to a Green Paper on the subject. This accepted many of committee's proposals, but there were several important areas where neither the committee nor the public (when the paper was given a public airing afterwards) could agree.

One of most controversial topics of that document was the proposal that a levy be raised on the purchase of blank tapes by the consumer. The Government considered the subject ticklish enough to warrant further debate, and the upshot of this was another Green Paper, proposed in 1985: The Recording and Rental of Audio and Video Copyright Material.

In this paper, it was once more proposed that a levy should be raised on every blank cassette bought, and it was more tentatively suggested that the levy might extend to recording equipment. A scheme was also suggested for its implementation.

The reason for introducing the levy is so that the effect of money lost (because people taped borrowed records rather than bought their own) could be offset by the money raised by the levy. This would be given to all those who contributed towards the making of copyright material such as records. In this way the unlimited opportunities this would offer for private copying would become neutralised.

The levy is supported by performers' organisations and record manufacturers but was attacked by all those who use blank tapes for the recording of non-copyright material. There was general opposition to the introduction of a video tape levy. However it began to look likely that the levy would eventually become law. Not only was the British Government studying the proposals, but so was the EEC.

Now the Government has taken the next logical step towards the introduction of the tape levy; it has released a White Paper entitled 'Intellectual Property Rights and Innovation'. This deals with much more than the levy itself, but as most of the Paper is irrelevant to the scope of this article (and because it would take about 50 pages to do it justice), let's restrict ourselves to the issue of the levy itself.

The Case for Change

Most of the levy's supporters are happy with the Government's proposals (or 'royalty' as they prefer to call it) in most respects. The International Federation of Phonogram and Videogram Producers (IFPI) for example, are most forthcoming in voicing their point of view. They are concerned, not unnaturally, with the effect that home taping is having on the record industry.

Whether mainly due to home taping or not, it's a fact that recorded music sales dropped by a third during the period 1978-1984 in Common Market countries. (However, it must be borne in mind that some EEC countries have already implemented a levy.) This must have an effect on jobs, and in Britain, the number of jobs in the recorded music industry have dropped by 24% in last four years. There is no way of estimating how much of this is due to home taping, but according to the IFPI, its effect is large enough to warrant some action being taken. They would like to see the royalty from blank tape sales to be distributed between artists, performers and composers in order that they be reimbursed for lost sales. This system is already in force in Germany, France and Portugal. In addition to Britain, Spain and Holland have expressed support for the idea. The EEC also intends to publish its own joint proposals.

Moreover, if, as the IFPI seems to think, home taping will soon reach 'time bomb' proportions, job losses in the music industry would lead to a general decline in recording standards.

A further downturn in the record industry will not only affect recording standards, but also the variety of records each company is willing to produce. In some countries there are already signs of this occurring. A healthy music industry depends to some extent on the ability to take risks in investing in new recordings and new artists. The wider the customers' choice the better, especially as the variety of music given radio play is, in Britain, severely limited. Not that the IFPI deny that the industry is in fact in quite a healthy state. Whereas so many other industries have been badly damaged by the depression, there have only recently been signs that the record industry is being affected.

But if a royalty system is introduced, won't that have a detrimental effect on the blank tape industry? In fact the IFPI admit that the blank tape industry, although much smaller, is dependent on the home taping market, and that several hardware companies also benefit from it. But at the same time they maintain that there is no evidence to suggest that blank tape sales will drop after introduction of the levy. In 1982, a royalty system was introduced in Sweden, and the sales of blank tapes remained stable rather than declined. Even if the blank tape industry is affected, the IFPI consider it to be smaller in terms of personnel employed and of less importance than the recording industry, and therefore it would be unjustified to endanger the larger industry for the sake of the smaller. Roughly 100,000 professional musicians in EEC countries largely depend on recording for their livelihood, whereas according to the German Government it takes no more than 500 people to produce 100 million units of blank tape per year.

Checking the Figures

Although the last year for which accurate figures are available is 1984, surveys from that year have yielded some interesting results. For example, a survey in the Netherlands showed that 53 million hours of music were taped at home each year. This would equate to a massive total of 83 million albums sold. However, in reality only 20 million were sold. A Government survey in the UK showed that a total of 270 million hours of home taping takes place a year, but again this does not relate exactly to the number of records sold. In the EEC as a whole, blank cassette tape sales rose from 280 to 315 million units between 1981 and 1985. (But is this anything more than a normal healthy increase, comparable with everything from sliced bread to bicycles?) Sales of pre-recorded cassettes also rose to 359 million in 1984.

The IFPI maintain that the real extent of home taping is much greater than this, as tapes are often used several times to copy different records. However, it could be argued that if someone records over (and therefore erases) an illegal copy of a record, he or she would not have bought that record anyway, and so this doesn't represent a lost sale for the record company.

As for the manufacturers who make the equipment used in home taping, the IFPI consider that a royalty on this gear is essential because the advance of technology may well soon encompass a method of home taping that does not involve cassettes, and in this eventuality, a royalty on the cassettes alone would not be effective.

A recent development in the recording field has been the invention of the new digital cassettes. These can provide compact disc quality cassette copies which have until now been unobtainable. This will mean that those who have previously dismissed audio cassettes as an inferior quality medium in preference to CD will now have the capability to tape at home. All of this means an increase in the number of home tapers.

Distribution

An important area in which great care will have to be taken is that of distribution of the proceeds. One of the most common complaints amongst the opponents of the royalty scheme is that the largest percentage of the proceeds will go to the most successful artists, instead of others who are more in need of receiving some reimbursement. However, care would be taken over the distribution of the levy to make sure this is not the case. In the States, for instance, where a royalty system is already in force, lesser known artists receive proportionally more than their share. In France, levy proceeds are distributed differently again, and 25% of them go into a collective fund and are then used for funding professional training and promoting performances. For the British levy system, the IFPI have selected three main groups that should benefit: authors and composers, performers and musicians, and film and record companies.

Distribution of the royalty is something which naturally concerns the Musicians' Union. In their opinion, performers are in general less well protected by copyright laws than composers and authors. Perhaps this should be reflected in their share of the royalties. Moreover they insist that no statutory limit should be set on the size of the levy, as it is very difficult to estimate just how much any person will receive.

The Case for Stability

Despite the determination of the Government and its supporters to introduce the royalty system, there is much opposition to the White Paper. One of the most outspoken of the objectors is, hardly surprisingly, the Tape Manufacturers' Group. They are concerned that redundancies will follow the loss in blank tape sales that they expect will result from the levy's introduction. But, on the other hand, redundancies are also feared by the record companies if the levy scheme were to be rejected.

From the practical point of view, however, there are many who admit that home taping is having a detrimental effect on the record industry, but consider that, to put it bluntly, the record industry 'had it so good' for a long time, and that the cause of the present slump since 1979 is not due to home taping but to a general slump in the economy, the rise in VAT on records, the poor quality pressing of many records and marketing errors by the industry. In addition to this, they insist that the cassette industry as a whole has actually had a beneficial effect on the record industry. The development of the cassette formed an entirely new and lucrative market for the music industry in the area of pre-recorded cassettes. As more people tape pre-recorded material at home, they become exposed to more artists, which can only be good for the pre-recorded music industry. It's certainly good for the consumer, especially as many popular radio stations have such a limited playlist.

It's not merely the manufacturers who would be affected though, they claim: suppliers would have to pay increased book-keeping costs. Furthermore, there is a definite possibility that some people involved in distribution would use the opportunity of the levy to raise their own mark-up, blaming it on the Government. This would be an easy task, as the price of blank tapes varies in any case, so there would be no standard price for all makes. The TMG therefore estimate that the final result for the public would be a raise of about 20% instead of 10% (although exactly how they arrive at this figure remains a mystery). Tape retailers might also seek to avoid paying the levy but still charge similar prices to legitimately levied cassettes, thereby dramatically increasing their profits. This is an abuse already widespread in Germany.

Another claim made by the TMG is that it would mean a significant increase in work for the police.

Hmmm...?

In addition to these practical considerations, the TMG put forward ethical and legal points to support their case. They consider that the whole levy concept is nothing but Government interference in free industry. After all, the Government seems to be merely taking money off one industry to give to another.

On the legal side it's possible, though by no means certain that the levy would be illegal under EEC law. If imported tapes were also to be made liable for a levy, this would restrict trade between EEC member states and would therefore contradict the present law. French blank tape manufacturers are currently involved in a test case in the courts concerning the legality of levies and German manufacturers are considering similar action. Many countries however permit home taping without a levy.

One lesson to be learned from the effects of the levy in Germany, which was introduced a year ago, is that the levy itself provided a massive incentive for blank tape dealers to avoid payment and thereby increase their profits by selling 'unlevied' tapes at a 'levied' price, thus encouraging the smuggling of unlevied tape into the country with the consequent undermining of legitimate supplies.

Distribution — A Second Opinion

There are powerful arguments too, against the Government's capability to distribute the levy fairly. The TMG is one of several bodies who have concluded that not enough money would get through to the copyright holders after all bureaucratic processes involved had been sorted out. How would it be fairly distributed amongst all the many beneficiaries? In fact the Government has stated that if a fair distribution scheme cannot be found, they will abandon the whole scheme (although they naturally have every confidence that one will be found... ). Many believe that copyright holders can never receive their fair share unless huge and costly surveys are carried out, and any survey that bases the royalty received on the number of records sold may well be inaccurate. An album that has sold a great deal may well have suffered less at the hands of home taping. Take an album such as Dire Straits' Love Over Gold. Many people will prefer to buy the record (or CD) rather than the cassette simply because of the better quality involved. On an album with as wide a dynamic range as this, soft passages will always show up tape hiss on a cassette.

In addition to this disparity, money would have to be spent in setting up an agency to superintend the levy's distribution, and this would take up a large slice of the levy proceeds. According to the Consumer Electronics Organisation a 10% levy would cost the public £5m at their present rate of blank cassette purchase. How much of this would reach copyright holders is not specified or even estimated by the Government.

Not Guilty

Of course there are many blank cassette users who do not record copyright material onto tape, but instead record original material or use them legitimately in the course of their jobs. This is where recording studios of all kinds fit into the picture. Cassettes are used in recording studios to record from original masters, or in home studios as the actual master tape and in multitrack cassette recorders. The Government could not legitimately penalise these users of cassette tape, and yet that is exactly what they would be doing if the royalty scheme were to be accepted. They would be forced either to claim back the royalty afterwards, a tiresome and unnecessary operation, or to acquire a licence to record in their own studios. The irony is that, having paid the royalty prices on cassettes, some of these very same people may be receiving benefits from them.

So, the Government would presumably have to grant that certain people would be exempt from paying the levy. If certain organisations were exempt, other problems would arise. For instance there's the risk that some of these groups would exploit their position and start distributing blank cassettes for a profit. If this were so, the sheer number of exempt organisations in the country would make it impossible for the Government to monitor and check up on each one.

Then there's the question of the disabled. Blind people in particular make heavy use of blank tapes in their leisure and study activities, and as part of everyday life. Shopping lists, memos and talking newspapers are all ideally suited to the medium of blank cassettes and are often essential to the blind individual. All disabled people will certainly be exempt from paying the levy, but it's nevertheless very inconvenient have to reclaim this money afterwards, particularly as organisations such as the RNIB do not have the manpower to arrange for the claiming, collecting and distributing of rebates. It will therefore be up to blind individual to claim it back, and this would impose a completely unnecessary burden on the disabled. Moreover, any rebate received will not include any other mark-ups that the tapes may have been subjected to along the line from manufacturer to retailer.

A further possible scheme would be to enable shops to retail non-levied blank tapes to the visually handicapped. However, if implemented, it seems as though it would not be made compulsory for all retail outlets.

As stated above, home studio owners will have to pay the levy first and claim it back later, but according to the new White Paper, only organisations will be able to do this. So home studio recordists will have to find and join an exempt organisation to be able to claim back the levy. There already exists one such organisation which is crying out for more members. Anyone interested, write to the Home Studio Recording Association, (Contact Details). At the moment, the HSRA is in the process of lobbying MPs on the levy question.

But not all blank tapes it seems will be subject to the levy, merely those over 35 minutes in total length. This regulation is designed to protect tapes used for applications such as computer file storage. For the home recordist, however, it is of no advantage. The longest commercially produced tape unaffected by the levy is a C30 (15 minutes per side at normal tape speed). For those recording at 3¾ips, tape speed of many cassette multitrack recorders, such as the Fostex 250 or Tascam 246, they are limited to 7½ minutes per side for each unlevied tape.

Ethics

One of the most common arguments against the levy is that an individual does not always tape other people's records, but may tape his own. The reasons for an individual's taping from his own record collection are usually threefold. Many people tape records so as to preserve the record's condition. Records deteriorate faster than cassettes, so a record's life is multiplied literally a hundred-fold by taping it and listening to the tape alone until its quality deteriorates enough to warrant the record being taped again and so on. Making up compilations of tracks by different artists, such as a tape of 'favourites' or 'dance tracks' is also extremely popular, as is the taping of records for use on in-car, portable or personal stereos. Those opposed to the levy argue that taping your own record is no different from listening to that record a greater number of times: if the consumer paid for the record, he or she has paid for the right to listen to it as many times as they like. To set up a levy scheme such as this opens the door to extending its principle to other consumer goods. Imagine a levy paid on books to guard against possible photocopying or on paintings to cover possible future artists' copies.

Some organisations, such as the Home Taping Rights Campaign go even further than this in their opposition. Launched on the 1st July this year, the Campaign brings together several groups opposed to the levy and represents the most radical opposition to Government's policy.

Its members are adamant that even the copying of borrowed records should be legalised without any levy raised on blank tapes (although this would regarded as illegal under the as yet unratified Berne Convention). They regard copying borrowed records merely an extension of copying your own records, like borrowing books; if music can be broadcast and taped off the radio by anyone, why shouldn't it be taped off a borrowed record?

Here we come back to the question of what exactly you buy when you purchase the record. In the eyes of the Government and its supporters, you are buying the record, pure and simple, and the right to play that specific piece of vinyl as many times as you like. It is explicitly stated in the White Paper that it should be the right to play that one record that the consumer pays for, not the right to listen to that music. Many of those opposed to the levy (such as the Home Taping Rights Campaign) dispute this. They insist that to buy a record, you're in fact buying the right to listen to the music on the vinyl any number of times. This would naturally include the right to tape your own records. As to the question of who has the right to hear that record, surely you cannot limit to one the number of people hearing it, so if others have the right to hear that music, it should not matter in what form they hear it - record, CD, pre-recorded tape or home-made tape; it's still the same music.

But when it comes to the question of piracy (the copying and distribution of original recordings made illegally such as bootlegs), the Campaign supports the Government without qualification. However, this is a small threat to the music industry compared to home taping.

So that's just about wrapped up the arguments for and against the motion. Next month we'll look at the White Paper in close detail and discover exactly what the Government is proposing to introduce.