All cultures have their fables: simplistic stories, perhaps inspired by historical events, that serve to convey a moral lesson. There is no grey area in fables; they present a binary right/wrong view that serves to solidify the bonds of the group.
One of the primary fables of copyright’s skeptics is the story of the Supreme Court’s Betamax decision. In the late 70s, Sony introduced a device that could hook up to a television and record shows for later viewing. “Hollywood” sued Sonyâ€”because they hate innovation, arrgh! The studios lost the case, but, in spite of this, the home video market ended up being a major revenue source for them. The moral of the story: copyright owners oppose any new technologies at their own peril.
It’s a simplistic (and vastly inaccurate) tale. The real story is far more nuanced and interesting, one that is expertly told by New Yorker writer James Lardner in his 1987 book, Fast Forward: Hollywood, the Japanese, and the VCR Wars. With the 30th anniversary of the Betamax decision tomorrow, I thought it would be timely to offer a review of book, readily available at libraries and used book stores.
After a brief introduction setting the stage for the Supreme Court case, Lardner rewinds to post-WWII Japan, where Masaru Ibuku and other employees of a company that had supplied precision military equipment moved back to Tokyo to rebuild from the ashes, literally (Lardner describes how Ibuku “had to send scavenging parties out into the country side for rice and vegetables.”) Ibuku partnered with tinkerer Akio Morita to form Tokyo Tsushin Kogyoâ€”later, Sonyâ€”in 1946. The two set their sights on the consumer electronics market, gravitating toward tape recording, a recent development from Germany. The company soon began to pursue the development of transistors as well.
Over the next several chapters, Lardner traces the pursuit of a portable way to record and playback audio and video, a pursuit that occurred over several decades and multiple continents. The tinkerers in Japan were joined by similarly driven individuals and companies in the US and Europe; the pursuit was at times cooperative and at times competitive; and progress happened both incrementally and through innovative leaps. As Lardner points out throughout this discussion, the challenges were not only technological but commercialâ€”surely there would be a market for recorded video… but as with any new technology, development of a market is often a chicken and egg problem. The recounting here demonstrates these points through efficient narrative.
Contrary to the refrain of copyright opponents, the creative industries did not sit idly by until the introduction of the Betamax, then spring into full-on active resistance. Fast Forward details how by the mid 1960s, for example, CBS was engaged in R&D to develop EVR: electronic video recording. A decade before Betamax, news magazines were predicting a future of home movie viewing. By 1970, Twentieth Century-Fox was experimenting with releasing a library of films on EVR cartridges. In a few years, Sears began selling and distributing “Cartrivision”, a console system that could play video cartridgesâ€”and record television programs. Several film studios licensed their titles, making over 300 available for sale or rental by 1972. But, as Lardner reveals, Cartrivision was not yet ready for primetime. The technology was too novel to catch on, technical glitches slowed adoption, and the business model for the hardware had one too many kinks (for example, the cartridge player was only sold as part of a television console, a tough sell at a time when replacing televisions wasn’t something consumers did too often).
When Sony finally unveiled its Betamax unit in 1976, it didn’t suffer these problems. It was a standalone unit, the technology had improved, and the nationwide advertising campaign succeeded in selling consumers on the features and benefits, particularly the ability to record off the air.
We next shift to the beginning of the litigation, which, it may surprise you if you’ve only heard the copyright skeptic version, only involved two studio plaintiffs: Universal and Disney. The trial covered many issues we would expect to hear today: were copyright owners being harmed by this technology, was Sony purposely encouraging infringement, could the technology be designed to mitigate unauthorized copying. But the court would clear Sony of any liability.
Lardner next provides historical and legal context about copyright law for the reader. What emerges is the fact that while the technological or business changes that the Betamax brought may have been predictable, the legal implications were not. Lardner says of the lower court decision, “For the first time a court had ruled that copying for mere entertainment or convenience was fair use, that copying of a whole work could qualify, and that individual copiers could gain immunity from the law simply by committing their offenses in a noncommercial setting, while frankly commercial interestsâ€”the suppliers of the machines involvedâ€”could profit as much as they liked. Finally, and most ominously, the decision suggested that infringement wasn’t really infringement unless the victim could prove economic harm.”
Here Lardner quotes from a lecture by then federal register of copyrights David Ladd:
The glory of copyright is that it sustains not only independent, idiosyncratic, and iconoclastic authors, but also fosters daring, innovative, and risk-taking publishers. . . . Copyright supports a system, a milieu, a cultural marketplace which is important in and of itself. . . . It does not ‘give’ the author or the publisher anything. It cloaks in legal raiment the undoubted right. It does not guarantee success, or audience, or power, or riches. It is not a warranty, but an invitation to risk. When the rewards are large, we should not resent or envy, but rejoice, and we should likewise cherish every miserable failure.
Then, five years after the lawsuit was filed, the Ninth Circuit reversed and found Sony liable for copyright infringement, though the precise question of remediesâ€”damages, an injunction, something else, or some combination of theseâ€”was returned to the lower court for determination. Proceedings were stayed once the case was appealed to the Supreme Court.
But Sony began falling behind in the market because of stiff competition. It wasn’t long before everyone and their brother were selling home video player/recorders, despite the unsettled risk of liability. The technology was a disruption of the way movie studios had been operating, and each studio responded differently. As noted earlier, there were continued experiments in offering pre-recorded films directly to consumers, other studios were holding out hope for a (nonrecordable) home videodisc system in development.
Twentieth-Century Fox was signing deals to provide home videotapes within months of the Betamax’s introduction. They were joined soon by Viacom and a number of smaller and independent copyright owners. By the early 80s, all the studios were offering films for home rental and saleâ€”and, indeed, home rental was exploding as an industry. It was only by this point that the MPAA got involved in the issue. Following the Ninth Circuit decision, the trade association began a push for a royalty on VCRs and blank tapes in Congress, the idea being to immunize device manufacturers from copyright claims while compensating copyright owners for the infringement that such devices facilitated. The MPAA’s involvement wasn’t a foregone conclusion; as noted, some studios were already engaged in the home video market.
At the same time, the consumer electronics industry sprung into high gear. Here we see the emergence of the copyright skeptic crowd, a loose confederation of consumer electronic manufacturers, content distributors, and consumer groups. And from here, things escalated. Lardner takes us through the Supreme Court arguments, the (unlikely) reargument, and the push for Congressional action in the wake of the Supreme Court’s reversal of the Ninth Circuit that absolved Sony of any copyright liability. The money was flowing into lobbyists and trade associations on both sides. This was the time of Jack Valenti’s infamous “Boston Strangler” remark, but it was also the time of political cartoons about jack-booted video police breaking into Americans’ living rooms to stop home recording; the hyperbole was equally distributed.
In the end, no legislation addressing the Supreme Court’s Betamax decision passed. The home video market had long been born, but so too had the copyright skeptic movement. Lardner recalls talking to Dale Snape, one of the film industry’s consultants during the Betamax case at this point:
He [Snape] wondered if it had been “a personal failing on my part that I cannot seem to bring people to the conclusion that the consumer’s stake comes before the time when he is paying for somethingâ€”that it comes when choices are being made about what he can choose among to buy. It is personally very sad for me,” he said, “that groups like the Consumer Federation of America and Consumers Union look at these proposals in a hostile way.” He was in awe of the electronics industry’s ability to persuade people that “because they sell to consumers, they ipso facto represent consumers. The leap of faith you have to make,” he said, “is just staggering! The Consumer Product Safety CommissionÂ exists because of concern about manufacturers.”
This is an incredible book. Lardner has talked to a wide cross-section of participants in this moment of history and has gotten some candid and thorough responses. He weaves his research into an engaging narrative that does justice to the events and the issues. This is not only a good read but an important documentation of Betamax. Given the importance of the case to modern U.S. copyright jurisprudence, I think this book ranks as a must-read for any copyright nerd.
There are some who would say that the lesson of Betamaxâ€”or at least the fable versionâ€”is that the Copyright Act should be construed to favor tech companies over artists and creators. “When ‘technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose’, and courts should be ‘reluctan[t] to expand the protections afforded by the copyright without explicit legislative guidance,'” writes academic David Post in a recent article about Aereo.Â Thirty years later, not too many people continue to use Betamax playersâ€”in fact, Betamax had lost most of its market share before the Supreme Court had even endorsed its legality. But they do still enjoy films such as Rocky or Taxi Driver (both released the same year the Sony litigation began). A policy that favors Betamax’s over the creation of films like that seems short-sighted and ultimately detrimental to allâ€”including the manufacturer of the next Betamax.