Audio Home Recording Act
The Audio Home Recording Act of 1992 (AHRA) amended the United States copyright law
United States copyright law
The copyright law of the United States governs the legally enforceable rights of creative and artistic works under the laws of the United States.Copyright law in the United States is part of federal law, and is authorized by the U.S. Constitution...

 by adding Chapter 10, "Digital Audio Recording Devices and Media". The act enabled the release of recordable digital formats such as Sony
, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....

 and Philips
Koninklijke Philips Electronics N.V. , more commonly known as Philips, is a multinational Dutch electronics company....

' Digital Audio Tape
Digital Audio Tape
Digital Audio Tape is a signal recording and playback medium developed by Sony and introduced in 1987. In appearance it is similar to a compact audio cassette, using 4 mm magnetic tape enclosed in a protective shell, but is roughly half the size at 73 mm × 54 mm × 10.5 mm. As...

 without fear of contributory infringement lawsuits.

The RIAA and music publishers, concerned that consumers' ability to make perfect digital copies of music would destroy the market for audio recordings, had threatened to sue companies and had lobbied Congress to pass legislation imposing mandatory copy protection technology and royalties on devices and media.

The AHRA establishes a number of important precedents in US copyright law that defined the debate between device makers and the content industry for the ensuing two decades. These include:
  • the first government technology mandate in the copyright law, requiring all digital audio recording devices sold, manufactured or imported in the US (excluding professional audio equipment) to include the Serial Copy Management System
    Serial Copy Management System
    The Serial Copy Management System or SCMS is a copy protection scheme that was created in response to the digital audio tape invention, in order to prevent DAT recorders from making second-generation or serial copies. SCMS sets a "copy" bit in all copies, which prevents anyone from making further...

  • the first anti-circumvention provisions in copyright law, later applied on a much broader scale by the Digital Millennium Copyright Act
    Digital Millennium Copyright Act
    The Digital Millennium Copyright Act is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization . It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to...

  • the first government-imposed royalties
    Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...

     on devices and media, a portion of which is paid to the record industry directly.

The Act also includes blanket protection from infringement actions for private, non-commercial analog audio copying, and for digital audio copies made with digital audio recording devices.

History and legislative background

By the late 1980s, several manufacturers were prepared to introduce read/write digital audio
Digital audio
Digital audio is sound reproduction using pulse-code modulation and digital signals. Digital audio systems include analog-to-digital conversion , digital-to-analog conversion , digital storage, processing and transmission components...

 formats to the United States. These new formats were a significant improvement over the newly introduced read-only digital format of the compact disc
Compact Disc
The Compact Disc is an optical disc used to store digital data. It was originally developed to store and playback sound recordings exclusively, but later expanded to encompass data storage , write-once audio and data storage , rewritable media , Video Compact Discs , Super Video Compact Discs ,...

, allowing consumers to make perfect, multi-generation copies of digital audio recordings
Digital recording
In digital recording, digital audio and digital video is directly recorded to a storage device as a stream of discrete numbers, representing the changes in air pressure for audio and chroma and luminance values for video through time, thus making an abstract template for the original sound or...

. Most prominent among these formats was Digital Audio Tape
Digital Audio Tape
Digital Audio Tape is a signal recording and playback medium developed by Sony and introduced in 1987. In appearance it is similar to a compact audio cassette, using 4 mm magnetic tape enclosed in a protective shell, but is roughly half the size at 73 mm × 54 mm × 10.5 mm. As...

 (DAT), followed in the early 1990s by Philips' Digital Compact Cassette
Digital Compact Cassette
Digital Compact Cassette was a magnetic tape sound recording format introduced by Philips and Matsushita in late 1992 and pitched as a successor to the standard analog cassette. It was also a direct competitor to Sony's MiniDisc but neither format toppled the then ubiquitous analog cassette...

 (DCC) and Sony's Minidisc
The disc is permanently housed in a cartridge with a sliding door, similar to the casing of a 3.5" floppy disk. This shutter is opened automatically by a mechanism upon insertion. The audio discs can either be recordable or premastered. Recordable MiniDiscs use a magneto-optical system to record...


DAT was available as early as 1987 in Japan and Europe, but device manufacturers delayed introducing the format to the United States in the face of opposition from the recording industry. The recording industry, fearing that the ability to make perfect, multi-generation copies would spur widespread copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...

 and lost sales, had two main points of leverage over device makers. First, consumer electronics manufacturers felt they needed the recording industry's cooperation to induce consumers — many of whom were in the process of replacing their cassettes
Compact Cassette
The Compact Cassette, often referred to as audio cassette, cassette tape, cassette, or simply tape, is a magnetic tape sound recording format. It was designed originally for dictation, but improvements in fidelity led the Compact Cassette to supplant the Stereo 8-track cartridge and reel-to-reel...

 and records with compact discs — to embrace a new music format. Second, device makers feared a lawsuit for contributory copyright infringement.

Despite their strong playing hand, the recording industry failed to convince consumer electronics companies to voluntarily adopt copy restriction technology. The recording industry concurrently sought a legislative solution to the perceived threat posed by perfect multi-generation copies, introducing legislation mandating that device makers incorporate copy protection technology as early as 1987. These efforts were defeated by the consumer electronics industry along with songwriters and music publishers, who rejected any solution that did not compensate copyright owners for lost sales due to home taping.

The impasse was broken at a meeting in Athens
Athens , is the capital and largest city of Greece. Athens dominates the Attica region and is one of the world's oldest cities, as its recorded history spans around 3,400 years. Classical Athens was a powerful city-state...

 in 1989, when representatives from the recording industry and the consumer electronics industry reached a compromise intended to enable the sale of DAT recorders in the United States. Device manufacturers agreed to include SCMS in all consumer DAT
Digital Audio Tape
Digital Audio Tape is a signal recording and playback medium developed by Sony and introduced in 1987. In appearance it is similar to a compact audio cassette, using 4 mm magnetic tape enclosed in a protective shell, but is roughly half the size at 73 mm × 54 mm × 10.5 mm. As...

 recorders in order to prevent serial copying. The recording industry would independently pursue legislation requiring royalties on digital audio recording devices and media.

A year later the songwriter Sammy Cahn
Sammy Cahn
Sammy Cahn was an American lyricist, songwriter and musician. He is best known for his romantic lyrics to films and Broadway songs, as well as stand-alone songs premiered by recording companies in the Greater Los Angeles Area...

 and four music publishers, unhappy with the absence of a royalties provision in the Athens agreement, filed a class action copyright infringement suit against Sony. The plaintiffs sought declaratory and injunctive relief that would have prevented the manufacture, importation or distribution of DAT recorders or media in the United States. The suit brought Sony to heel. In July 1991, Sony, as part of larger agreement between the recording industry and consumer electronics makers, agreed to support legislation creating a royalty scheme for digital media. In exchange, Cahn and the publishers agreed to drop the suit.

With all the major stakeholders satisfied, the bill easily passed both houses of Congress. President George H. W. Bush
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...

 signed the AHRA into law in 1992 proclaiming " S. 1623 [AHRA] will ensure that American consumers have access to equipment embodying the new digital audio recording technology. It also protects the legitimate rights of our songwriters, performers, and recording companies to be rewarded for their talent, expertise, and capital investment. this will be accomplished by tax payers compensating these artists for the copying of their works and by creating a system that will prevent unfettered copying of digital audio tapes."

Digital Audio Recording Device defined

The AHRA's statutory definitions of "digital audio recording device" and "digital audio recording media" are crucial to understanding the implications of the Act. The distinction between covered and non-covered devices or media dictates whether or not royalties are paid and whether the SCMS copy control technologies are included. The language of the act protects all noncommercial copying by consumers of digital and analog musical recordings regardless if the copy control technology is present or the royalty has been paid.

The statutory definition states:

A "digital audio recording device" is any machine or device of a type commonly distributed to individuals for use by individuals, whether or not included with or as part of some other machine or device, the digital recording function of which is designed or marketed for the primary purpose of, and that is capable of, making a digital audio copied recording for private use.

The definition of "digital audio recording medium" is similar:

A "digital audio recording medium" is any material object in a form commonly distributed for use by individuals, that is primarily marketed or most commonly used by consumers for the purpose of making digital audio copied recordings by use of a digital audio recording device.

In each case, the principal distinction between what is and is not covered by the AHRA is determined by whether or not the device is marketed or designed (or in the case of media, commonly used by consumers) to make audio recordings, not the device's capabilities. A CD-R recorder included as part of a personal computer would not be a digital audio recording device under the Act, since the personal computer was not marketed primarily for making copies of music. The same recorder, sold as a peripheral and marketed for the express purpose of making digital audio recordings, would fall under the Act's definition of a recording device.


The AHRA's definition of "digital audio recording device" includes explicit exceptions for devices that are used primarily to record non-musical sounds (such as dictation devices and answering machines) and for "professional equipment". The definition of professional equipment was to have been set by the Department of Commerce, though these regulations have never been issued. "Professional" minidisc recorders without SCMS cost thousands of dollars.

The AHRA's definition of "digital audio recording media" explicitly excludes pre-recorded but recordable media, and storage media used primarily to store information other than musical works.

This exception was crucial in RIAA v. Diamond Multimedia Systems, Inc., the only case in which the AHRA's provisions have been examined by the federal courts. The RIAA filed suit to enjoin the manufacture and distribution of the Rio PMP300
Rio PMP300
The Rio PMP300 was a portable consumer MP3 digital audio player , and was produced by Diamond Multimedia. It was introduced September 15, 1998, and it shipped later that year.-Features:...

, one of the first portable MP3 players, because it did not include the SCMS copy protection required by the act, and Diamond did not intend to pay royalties. The 9th Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...

, affirming the earlier District Court ruling in favor of Diamond Multimedia, ruled that the "digital music recording" for the purposes of the act was not intended to include songs fixed on computer hard drives. The court also held that the Rio was not a digital audio recording device for the purposes of the AHRA, because 1) the Rio reproduced files from computer hard drives, which were specifically exempted from the SCMS and Royalty payments under the act, 2) could not directly record from the radio or other transmissions.

Serial Copyright Management System

The AHRA required that all digital audio recording devices conform to a form of copy protection called the Serial Copy Management System or its functional equivalent. The AHRA also prohibited circumvention of SCMS and importation, distribution or manufacture of such tools. Violations of either provision are punishable by up to $25 per recording, or $2,500 per device.

Payment of royalties

Under the AHRA, importers and manufacturers pay royalties on "digital audio recording devices" and "digital audio recording media". Those who wish to import, manufacture and distribute must seek a statutory license from the Copyright Office. Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...

 are based on "transfer price", either the sale price or the price recorded for customs purposes in the case of importers.

For digital audio recording devices, manufacturers and importers pay a 2% royalty on the device's transfer price, with a minimum royalty of $1 and a maximum of $8 ($12 for dual recorders) per device. For digital audio recording media, manufacturers and importers pay a 3% royalty.

Distribution of royalties

Under the AHRA, royalties collected by the Copyright Office on digital recording devices and digital recording media are divided into two separate funds, the Musical Works Fund and the Sound Recordings Fund. One third of the royalties goes to the Musical Works Fund, which splits its cut 50/50 between writers (distributed by ASCAP, BMI
Broadcast Music Incorporated
Broadcast Music, Inc. is one of three United States performing rights organizations, along with ASCAP and SESAC. It collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed...

, and SESAC
SESAC, originally the Society of European Stage Authors & Composers, is the smallest of the three performance rights organizations in the United States. SESAC was founded in 1930, making it the second-oldest performing rights organization in the U.S. SESAC is also the fastest-growing PRO in the...

) and music publishers (distributed by Harry Fox Agency
Harry Fox Agency
The Harry Fox Agency is the United States of America's largest agency collecting and distributing mechanical license fees on behalf of music publishers.-External links:*...

). These parties receive royalties according to the extent to which their recordings were distributed or broadcast.

The remaining two thirds of the royalties are placed in the Sound Recordings Fund. Four percent of these funds are taken off the top for non-featured musicians and vocalists (distributed by the American Federation of Musicians
American Federation of Musicians
The American Federation of Musicians of the United States and Canada is a labor union of professional musicians in the United States and Canada...

 and AFTRA
American Federation of Television and Radio Artists
The American Federation of Television and Radio Artists is a performers' union that represents a wide variety of talent, including actors in radio and television, as well as radio and television announcers and newspersons, singers and recording artists , promo and voice-over announcers and other...

), what remains is split 60/40 between two sets of "interested copyright parties". Interested copyright parties, a heretofore unknown category in copyright law, is defined by the act as featured artists receive 40%, and the owners of the right to reproduce sound recordings (an individual or company, mostly the record label, who owns the master sound recording) receive 60%. These parties receive royalties through the Alliance of Artists and Recording Companies
Alliance of Artists and Recording Companies
The Alliance of Artists and Recording Companies. is a non-profit US royalty collective, assembled by the US music industry in conjunction with the Audio Home Recording Act of 1992, that protects the rights of featured artists and recording companies both domestically and abroad in the areas of...

 (AARC) according to the extent to which their recordings were sold, based on sales in the United States, both digitally and retail.
The inclusion of the reproduction rights holders was unprecedented in United States copyright law. Almost thirty-nine percent of the royalties collected under the AHRA go not to songwriters and musicians, but to the record labels who own the right to copy and distribute their recordings. The justification for this cross subsidy is that the copying enabled by the digital technology is a loss of profits for the recording industry, and that they should be compensated for this loss.

It is unclear whether the recording industry ever thought that revenue from royalties would compensate for revenues lost to the first generation copying authorized by the AHRA. Given their willingness to block all distribution of all digital audio recording media and devices in the United States, that the combination of SCMS and the price premium imposed by royalties was intended to cripple the market. It is also possible that given a new technology, and the Act's unprecedented provisions (royalties, legislative mandates for copy protection), they could not predict the impact of the AHRA on adoption of the new technology.

Regardless of their intent, AHRA royalties have never been a significant revenue stream for anyone, least of all the recording industry. Revenues for the Copyright Office's Digital Audio Recording Technologies (DART) Fund peaked at $5.2 million in 2000, and have been declining, at times precipitously, ever since. Revenues for 2005 were approximately $2.4 million. According to its Web site, the Alliance of Artists and Recording Companies (with its 38% share of all DART royalties) has distributed less than $19 million since 1993, a figure which includes home taping royalties from three other countries.

Exemption from infringement actions

The AHRA contains one positive provision for the consumer electronics industry and consumers, section 1008, a "Prohibition on certain infringement actions:"

"No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings."

According to the Senate, this provision was intended to conclusively resolve the debate over audio home taping, and "[create] an atmosphere of certainty to pave the way for the development and availability of new digital recording technologies and new musical recordings." They were partially successful: this provision made the sale of DAT and Minidisc possible in the United States, by protecting device manufacturers, importers and distributors from infringement suits like Cahn v. Sony.

Private, noncommercial copies by consumers using "digital audio recording devices" are explicitly protected by §1008. The Senate report defines noncommercial as "not for direct or indirect commercial advantage", offering examples such as making copies for a family member, or copies for use in a car or portable tape player.

Unresolved questions

Still, the AHRA was unsuccessful in its attempt to "conclusively ... resolve this debate" over the legality of home taping. Section 1008 explicitly allows private, noncommercial home copying with "analog" devices and media. The primary difficulty lies in the definition of "digital audio recording device". Though there are no reliable figures on the subject, the meager returns to the Copyright Office's DART fund amidst widespread copying and dissemination of digital music suggests that a great deal of copying, noncommercial or otherwise, is accomplished using devices not covered by the AHRA. For these devices, including MP3 players, computer hard drives, and most CD burners and CD-Rs, the section 1008 exemption, which applies only to copies made with a "digital audio recording device" as defined by the act, may not apply.

However, language in the RIAA v. Diamond Multimedia decision described above suggests a broader reading of the Section 1008 exemptions, providing blanket protection for "all noncommercial copying by consumers of digital and analog musical recordings" and equating the spaceshifting of audio with the fair use protections afforded home video recordings in Sony v. Universal Studios:

In fact, the Rio's operation is entirely consistent with the Act's main purpose — the facilitation of personal use. As the Senate Report explains, "[t]he purpose of [the Act] is to ensure the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommercial use." S. Rep. 102-294, at *86 (emphasis added). The Act does so through its home taping exemption, see 17 U.S.C. S 1008, which "protects all noncommercial copying by consumers of digital and analog musical recordings, " H.R. Rep. 102-873(I), at *59. The Rio merely makes copies in order to render portable, or "space-shift", those files that already reside on a user's hard drive. Cf. Sony Corp. of America v. Universal City Studios, 464 U.S. 417, 455
(1984) (holding that "time-shifting" of copyrighted television shows with
VCR's constitutes fair use under the Copyright Act, and thus is not an infringement). Such copying is paradigmatic non-commercial personal use entirely consistent with the purposes of the Act.

This language, however, may be obiter dicta.

Relevance to XM lawsuit

The AHRA is important in the recording industry's suit against XM radio for Samsung
The Samsung Group is a South Korean multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea...

's Helix and Pioneer
Pioneer Corporation
is a multinational corporation that specializes in digital entertainment products, based in Kawasaki, Kanagawa, Japan. The company was founded in 1938 in Tokyo as a radio and speaker repair shop...

's Inno XM receivers, which allow users to record blocks of satellite radio
Satellite radio
Satellite radio is an analogue or digital radio signal that is relayed through one or more satellites and thus can be received in a much wider geographical area than terrestrial FM radio stations...

 and disaggregate individual songs. XM argued that the devices are "digital audio recording devices" ("DARD") under the AHRA, and thus enjoy an exemption from copyright infringement actions for private, non-commercial copying. A New York District Court judge agreed that these devices are DARDs because they can record from a transmission without the use of an external computer or computer hard drive. As manufacturers or distributors of DARDs, Samsung and Pioneer are immune from suit so long as they satisfy the requirements under the AHRA, including payment of royalties to the US Copyright Office, on a quarterly basis, for each device distributed. However, according to the District Court, this immunity does not protect XM with regard to the recording industry suit. The recording industry's complaint was based on XM's use of their music, not on the distribution of the devices. XM is currently licensed, under Section 114 of the US Copyright Act, to provide the recording industry's music via a digital satellite broadcast service. The recording industry's complaint, however, alleges that services such as the XM + MP3
MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as MP3, is a patented digital audio encoding format using a form of lossy data compression...

 distribute permanent digital copies of sound recordings without a license. XM is being sued for distributing the music industry's music without a distribution license, not for distributing devices such as the Helix and Inno. Therefore, the District Court denied XM's motion to dismiss on grounds that the AHRA immunity with regard to distribution of DARDs does not protect XM for a copyright infringement suit based on distribution of music without a license.

External links

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