All Commentary
Sunday, April 1, 1990

Freeing Digital Audio

Mr. Taylor is a reporter at The Smithfield Herald in Smithfield, North Carolina.

Technical innovation has long been recognized as a by-product of free societies. It is also true that these technical advances sometimes outstrip the development of legal systems. This often forces basic principles to be re-examined in light of the new developments. Advances in medical technology, for example, have created a host of celebrated legal confusions and debates in recent years.

Now, advances in digital audio technology are pushing the legal envelope in ways unimagined a decade ago. The growth in the use of several related applications guarantees that legal arguments will rage into the next decade with increasing calls for government to come up with a solution. Whether that “solution” will be compatible with principles of limited government is very much up in the air.

The Dilemma

Digital audio turns sound waves into binary (digital) code. Because digital technology allows music to be reproduced perfectly, literally duplicating the code, it has the potential to be used without regard to copyright considerations or notions of intellectual property. At the same time, digital audio promises to bring exceptional fidelity and flexibility to both composer and listener at costs well below current state-of-the-art analog systems. These aspects of digital audio already have spawned numerous conflicts between record companies and hardware manufacturers, musicians and music fans, and even between musicians—all of them with legitimate interests at stake. Any new laws, or applications of old ones, regarding digital audio technology must take into account these competing claims.

The best known of the disputes raised by digital audio technology has been the fight between the record industry and digital audio tape (DAT) deck manufacturers. (See “Leave DAT Alone,” The Freeman, November 1988.) From 1985 on, threats of legal action by the Recording Industry Association of America (RIAA) kept DAT machines out of U.S. markets. Indeed, for a time it seemed that the RIAA would succeed in convincing Congress that DAT would cost record companies billions of dollars in sales lost to pirated tapes. The RIAA lobbied Congress to impose a requirement that DAT machines be equipped with “copy-code chips” that would prevent specially encoded, prerecorded digital music from being copied on a DAT machine. Congress, however, balked after the copy-code system advocated by CBS Records was found to reduce fidelity.

But last summer the RIAA won in a voluntary accord what it couldn’t get through legislation: an agreement with hardware manufacturers that made massive pirating operations very difficult on new DAT machines. The agreement was made possible by a copy-protection system developed by the Dutch electronics giant NV Philips. The Philips system, called the Serial Copy Management System (SCMS), allows consumers to make copies of a prerecorded DAT, CD, or other copyrighted material, but copies of copies cannot be made.

Thus the SCMS system is compatible with current copyright law, which permits the “fair use” of copyrighted musical performances for personal use only. The music pirates are thwarted by SCMS because it makes high- speed copying of third and fourth generation tapes impossible. Also, any attempt to bypass the two-digit code will likely be expensive, thereby reducing the profit potential for pirates, and will also reduce sound quality, thus denying the chief benefit of DAT to pirates.

This happy outcome for proponents of property rights and limited government has one drawback. The RIAA, which isn’t satisfied with the voluntary agreement, is expected to ask Congress to mandate the SCMS for all DAT machines. The RIAA should realize that attempts to enforce such a statute, with testing and spot inspections, would only drive up the price of DAT machines, reducing the market for RIAA-produced prerecorded tapes. Besides, the hardware manufacturers have no reason to invite RIAA litigation by reneging on their agreement.

A Model for Other Disputes

If Congress doesn’t intervene, the agreement between the recording companies and hardware manufacturers could serve as a model for resolving other disputes involving digital audio technology without government intervention. Currently, the conflict with the most money at stake and the fewest legal guideposts involves digital sampling.

Sampling is a recording technique that allows a snippet of music, in the form of a section of binary code, to be lifted out of one piece of music and stuck into another. Thus James Brown’s primal screams and John Bohnam’s thundering drums have turned up on other artists’ recordings after being sampled. Only recently, as the sales of music made up of sampled sounds has soared into the millions, has the legality of the practice come into question.

As copyright law is now written, it isn’t clear where sampling fits in. The composition of a song is copyrighted for sheet music, and the original master tape of the song is also copyrighted. But much of what is sampled is a distinctive sound or tone that cannot be reduced to sheet music. Music lovers have long recognized that what makes a performance special isn’t so much a particular note, but the way that note is played. Sampling appropriates both the note and its performance.

Despite this, sampled sounds are not of long enough duration to make the new piece substantially similar to the old one—the traditional test for copyright infringement. As of yet no court has found that sampled music constitutes copyright infringement, but record companies already have made a tacit admission that the artists whose music is sampled must be compensated. For several years record companies that own the rights to the recordings have bartered pieces of sampled music back and forth. Now a few artists are being paid royalties by those who use and sell new versions of their music. Although these royalty rates are far from firmly established, the principle that sampled music is the property of its creator is.

A body of case law on the subject is just being developed. The outcome of one case that is expected to have far-reaching effects involves the ‘60s group The Turtles and avant-garde tappers De La Soul. The Tuffies have sued for $1.7 million, claiming that De La Soul lifted an organ line from one of their songs without paying royalties. Across the industry, billions of dollars in royalties and copyright infringement awards could hinge on the outcome.

The high cost of such litigation should spur record companies and artists to develop clear contractual arrangements that protect artists from digital thievery while allowing the full range of digital recording effects to be explored. Given that every section of music, no matter how small, has its own digital code, contracts could be drawn up specifying which section of music is to be used.

Clearly, if an artist chooses not to put snippets of his work on the market, other musicians could not use that work as building blocks for material they intend to sell. Using this approach, no egregious government intervention is needed. Rather, copyright protection would be extended for music much the same way it was extended for books following the introduction of photocopiers.

Constant Change

Because digital audio is so new, there no doubt will be continued calls for government to “solve” the many legal questions it raises. Concerns over pirating will again be voiced when Tandy Corporation introduces its recordable CD this year, and copyright considerations will be re-examined as digital video grows in popularity.

However, we should remember that the reason free societies enjoy such rapid technological advances is that inventors are rewarded for their genius. A government that tries to restrict the availability of new technologies, an ultimately futile undertaking, violates the rights of both inventor and consumer. Likewise, artists should • enjoy legal protection for their work and be free to sell their products unencumbered by government restraints.

For as long as principles of property rights and limited government are adhered to, advances in technology are not problems to be solved, but opportunities for free men to seize.