In the late 80s, Sony was attempting to introduce a new type of recording device to the US market: the Digital Audio Tape (DAT). Since DAT was a digital format, copies made on DATs would always be identical to the originals, unlike analog tapes which lose sound quality with each subsequent copy. Record companies therefore became concerned that this ability to serially copy sound recordings would displace record sales--their primary source of revenue. Although the recording industry and the consumer electronics industry managed to reach a settlement, Sony still ended up being sued by a group of songwriters. In an attempt to settle the dispute, in 1992, Congress passed the Audio Home Recording Act (AHRA) which resolved the outstanding lawsuits between the various parties.
The AHRA mandates that all digital recording devices, such as tape recorders, include a technological protection measure called the Serial Copyright Management System (SCMS), which prevents serial copying. The AHRA also requires importers and manufacturers of all digital audio recording devices and media to pay a royalty to record labels, artists, songwriters, and music publishers, for each device or unit of blank media sold. In other words, every sale of a digital tape recorder, blank CD, or blank digital tape results in a royalty being paid to copyright holders. In exchange for these payments, the Act immunizes consumers and electronics makers from lawsuits for copyright infringement based on consumer recordings made for personal use.
At the time of its passing, the AHRA was hailed as a compromise between the record industry and consumer electronics manufacturers, one that finally settled the dispute over home recordings and paved the way for the rollout of new digital recording technologies. However, despite the AHRA’s existence, a number of complaints have still emerged from the recording industry about new home recording technologies