Thirty Years Since Betamax, and Movies Are Still Being Made

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Thirty years ago yesterday the US Supreme Court (SCOTUS) ruled that time-shifting of TV shows using video recorders was legal. The ‘Betamax’ case, or Universal v Sony for its real name, has proven one thing for certain. When it came to the level of damages the industry predicted would be caused by technology they weren't even close to reality, a situation that continues today.

To those that don't remember, these are Betamax tapesIn 1984, the Supreme Court of the United States ruled 5-4 that the Sony Betamax recorder was legal, due to its significant non-infringing uses. This led to the consumer entertainment revolution of the last 30 years.

Everything from DVRs to tablets to MP3 players were made possible. Even the camera in your cellphone owes its existence to that ruling, as otherwise the ability to produce a copy of a copyrighted work (even of degraded quality) would have been enough to scupper its production.

Of the Betamax debate, however, the bit most people recall came from Congressional testimony some two years earlier, with MPAA President Jack Valenti telling Congress how the machine was ‘the Boston Strangler’ of the industry.

What most don’t remember though is that it was only one of four arguments made at the time. He also argued that the movie business was a really risky one, and that VCRs would impact the already tough advertising business. Additionally, machines made overseas would kill the US economy because of imports. And of course, OMG PIRATES!!!!!!!

So, how true were those claims? Sure the US economy’s pretty bad, but overseas electronics are not really a factor in that. Indeed, domestic production of machines to compete would probably have started before Valenti’s speech if it weren’t for… Valenti and his ilk. It happened later with MP3 players too, with the threats over the Diamond Rio in 1998 delaying their introduction.

What about advertising? Since we’ve had fast-forward buttons for 30+ years, all adverts are gone, right? No, as most people know, Google makes a fortune from adverts, even skippable and blockable ones. Sure some are made unskippable, but that’s only in the last few years – they could be sped-through at will during most of the 90s. It’s yet another non-starter argument.

How about the Risky Business part? Well, there’s another name for ‘risky business’, it’s called ‘business’. All businesses are a risk and most don’t last a year. And here the movie studios have not done themselves any favors over the past thirty years. While blockbuster films like ET, Ghostbusters and Superman III hovered at $30-40 million dollar budgets in the early 80s, the likes of Man of Steel and Iron Man 3 now cost more than $200Million. The first rule of pleading poverty is don’t massively increase your risk and spending. Not that they’ve had it so bad, with record year after record year.

Finally, how’s that piracy angle? Well, let’s start with VCRs themselves. Back in 1987 we had video sales surpassing the box office for studio income, so it doesn’t seem to have hurt them there. In fact, once they were resigned to it, it took them only four years to turn things around.

So what about the wider economy? Everyone remember the much maligned MPAA LEK study, that claimed piracy cost the world economy $6.1Billion in 2006? Well, Blockbuster, a company that existed ONLY because of the Betamax decision, had revenues of $5.5Billion in 2006. In other words, a loss to the economy the MPAA almost certainly exaggerated was almost wiped out by JUST ONE company that the MPAA almost prevented from existing.

To call Blockbuster the only beneficiary of the Betamax decision is short-sighted. US sales for that same year in ‘home video’ were another $5.4 billion just across the top 100 titles. Now anti-piracy activism looks a little short-sighted.

When you look back on all this and what that decision by the SCOTUS meant 30 years ago, there’s certainly something to worry about when it comes to further restrictions. Just these two things alone made a TEN BILLION DOLLAR increase to the US economy in one year, which would have been lost if the judges had listened to the same people whining about a $6 billion worldwide loss.

With that in perspective, any future claims of loss and damages should certainly be considered with a pinch of salt. Meanwhile it’s a happy 30th to the Betamax decision.


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