This course provides an engaging and methodical insight into the past and present cultural and commercial music industry developments, directions, and trends. It will equip the students with the knowledge and skills necessary to appreciate, understand and more productively participate in today’s music industry field.
Regulations: Digital Recording, Reproduction, and Transmission (Part 1)
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新世界：当代音乐产业导航
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從本節課中
Magnetic Recording and Multitracks
與講師見面
Darko VelichkovskiMusic Industry Program Director
Music Industry
The advent of digital recording brought with it some unresolved regulatory issues for the
music industry. Digital recording devices are capable of making a perfect copy of the
original recording, as well as making a perfect copy of such copy. Other words, there is no
degradation of the audio signal as progressive copies were made; unlike the analog devices,
like cassette recorders, for instance, that would degrade the signal with every additional
copy. OK, so that’s a good thing, right? Long live digital. Well, it is a good thing,
and a step forward technologically, but business wise, it became a music industry nightmare.
It’s like getting an oven that when you bake a loaf of bread in it, you can indefinitely
split and share that loaf, and never have any less because of it, and every piece you
share with others was exactly the same as yours. All the others need, is just a plate
to put their piece on. Get a few of those ovens in the neighborhood, and no one has
to buy their own bread anymore. So, down goes your local bakery, see?
And so just like that magical oven, consumer-type Digital Audio Tape recorders, CD recorders,
Mini-Disc recorders, and so forth, that were entering the market in the late 80s and early
90s, all had this digital copying advantage of creating perfect copies. So, many music
fans started just copying somebody else’s original digital audio product, like a CD,
instead of buying it themselves, and got perfect copies of it. Well, how do you mean “started”?
Didn’t we have that music copying thing going on before? What about all the records
that were copied onto cassettes by music fans, and all the prerecorded cassettes that were
copied onto blank cassettes, and the whole late 70s and 80s “mix tape” thing? Well,
that wasn’t the most fortunate of the situations for the industry either, but those were not
perfect copies, and if you wanted to have a copy that sounded like the original, you
simply had to buy the original. But now, you could have a copy that was as good as the
original, and that raised some serious concerns, so the industry turned to Washington for a
OK, so they wanted to restrict consumer type digital audio recorders, from being manufactured
and distributed, on the account of this copyright protection threat, right? Well, they probably
could not go that far, since the fact that you could infringe a copyright by using a
certain device, doesn’t mean that the device would be banned by law. Cassette recorders
could be used to copy and distribute audio copies illegally, but were not banned. Because
you could use them legally as well, and just make copies of the recordings you own, for
your own home use, and that was considered legal and “fair use”. Plus, the major
players in the recording industry didn’t want to ban consumer type recording devices.
Why not? Wasn’t that the source of the problem? Yes, but it was also a source of revenues
for some of them.
You see, four of the six major labels at the time, had business interests in the consumer
audio equipment field, as well as in the recording industry. Sony itself, brought a digital audio
tape recorder, and a mini-disc recorder to the market. Polygram was owned by Philips,
which not only owned patents for the analog cassette tape, but together with Sony also
developed a consumer-type recordable CD technology in 1990, as an offshoot of their original
music CD project. It also introduced a digital compact cassette recorder in 1991. EMI was
owned, at the time, by an electronics manufacturer Thorn EMI, that had ambitions in the digital
audio equipment market as well. Japanese electronics company Matsushita, bought MCI in 1990, and
was betting on digital compact cassette recorders along with Philips.
So you see the conundrum here. On the one hand these companies were producing recordings,
the sales of which were threatened by the digital audio recording devices and media.
And on the other hand, they were producing the devices and the media that threaten their
record sales. Interesting, isn’t it? Can you have your cake and eat it too? They sure
hoped so. But, of course, there are other interested and affected parties here in addition
to record labels - composers, publishers, recording artists. They all had to agree on
what to do regarding this problem.
The Audio Home Recording Act, the AHRA, was the result of several years of meetings and
negotiations between the major players in the music market. It was signed into law in
1992, and consists of several crucial provisions, which we should be familiar with.
First, it prohibits litigation based on private, home use, of the digital and analog recording
devices for copying copyrighted music material. Other words, copyright owners can not sue
someone for copying their music using digital or analog recorders, if it’s only for the
private, non-commercial use. Nor can they sue the manufacturers, importers, or the distributers
of such recording devices, if they pay the royalties prescribed by the Act, which we
will outline in a minute.
Second, consumer-type digital audio recording devices must all have a built-in system to
prevent serial copying of the digital audio material. Other words, every consumer-type
digital recorder must contain some form of a system, which would make copying a digital
copy impossible. The system, already developed at the time, called Serial Copy Management
System, is used in the Act as an example, but any other system with the same function,
certified by the Secretary of Commerce as such, is permitted as well.
And third, the United States manufacturers and importers of the consumer, non-commercial
type digital recording devices and recording media, are obligated to pay royalties to the
music copyright owners for every device and blank media they sell. The royalty amount
is 2 percent of the wholesale for the digital audio recorders, with the minimum payment
being 1 dollar, and the maximum 8 dollars per recorder, with the exception for the models
that contain multiple digital recording devices, in which case the maximum royalty is 12 dollars
per unit. For the blank digital audio media, such as blank recordable music CDs, digital
audio tapes, and so forth, the royalty is 3 percent per unit, with no floor or ceiling
amount.
Now, these royalties are referred to as Digital Audio Recording Technology royalties, or DART
royalties, and are administered by the Copyright Office. In 1993, an organization called Alliance
of Artists and Recording Companies, or AARC, was formed to collect the portion of the DART
royalties belonging to the recording artists and the record labels from the Copyright Office,
and to distribute it to its members. So, if you are running your own label, as we spoke
about in the earlier modules, and your recordings start to sell well, through all the legitimate
sales channels, make sure that you and your label register with AARC, as it is the most
convenient and productive way to receive a portion of these royalties.
The portion of the DART royalties belonging to the composers and the publishers, on the
other hand, is collected from the Copyright office by the performing rights organizations
(ASCAP, BMI, and SESAC), the Harry Fox Agency, and the Songwriters Guild, and distributed
to its members.
