What price digital? | EW.com

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What price digital?

What price digital? -- How much will tacking royalty tax on digital tapes cost you?

Some tapers, brace yourselves. Within a year, you may have to do something nobody in this country has done since the tape recorder was invented: pay a fee to record music at home.

Derided as the ”taping tax” by tech buffs who oppose it, the fee is the result of a groundbreaking agreement between two longtime foes: the music industry and manufacturers of home electronic equipment. The ”tax” — technically, a royalty charge — would be hidden in the price tags of upcoming digital-tape and disc systems designed to record sound at or near the quality of a compact disc. The point is to spread the wealth among songwriters, music publishers, and other copyright owners who say that home digital recording will deprive them of royalty income they would have gotten from sales of prerecorded CDs, as copying of tapes already has.

When the royalty arrangement goes into effect (it needs federal legislation, which its backers hope will come this fall), it seems sure to smooth the way for introduction of two new home-recording technologies: the digital compact cassette (DCC) and the mini disc. The tax would eliminate a hurdle that crippled last year’s launch of Sony’s digital audio tape (DAT) system: a virtual embargo on prerecorded tapes by uncooperative record companies. Will the new devices sound the death knell for the cassettes in use today? ”After this, the analog cassette is going to quietly fade to the low-price end of the market,” according to Bob Gerson, editor of the trade journal This Week in Consumer Electronics.

The royalty charges won’t be terribly burdensome. ”When (blank) tapes are three for five dollars, the royalty will be a nickel a tape. Who’s going to notice?” says Gerson. But the fees signal a monumental shift by electronics hardware companies, which have long fought for free home taping. In the early 1980s, for instance, Sony battled all the way to the Supreme Court to defend the right of VCR owners to tape TV broadcasts. Clearly, Sony has found it easier to understand the music industry’s discomfort with home taping since it bought Columbia Records. Many observers, in fact, see the new agreement as a direct result of the Japanese buying major American entertainment companies: Now that they own the software as well as the hardware, the Japanese are more willing to compromise with the recording artists they need.

Royalties may well become a fact of life for all future audio and video recording systems. In a statement praising the agreement, the Motion Picture Association of America said it hoped it could work out an ”intelligent solution” with equipment manufacturers should a similar technology threaten the movie business. The MPAA’s timing was poetic: At nearly the same time that the royalty compromise was announced last month, three big equipment makers (Sony, Matsushita, and Hitachi) agreed on standards for a wide-screen, high-definition VCR for the home. When a product like that hits the market, no one will be surprised if the MPAA sees a threat.