This article is from the Copyright Law FAQ, by Terry Carroll with numerous contributions by others.
This issue has been argued back and forth for many years, with consumers
groups arguing that this was a fair use (see sections 2.8 and 2.9), and
the recording industry arguing that it was not. The issue was finally
settled by Congress when the Audio Home Recording Act (AHRA) (P.L. 102-
563, 106 Stat. 4237, codified at 17 U.S.C. 1001 - 1010) was passed in
October 1992. This Act added ten sections to Title 17, one of which
provided an alternative to the fair use analysis for musical recordings.
The new section states:
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.
17 U.S.C. 1008.
As the legislative history to this statute noted, "In short, the reported
legislation would clearly establish that consumers cannot be sued for
making analog or digital audio copies for private noncommercial use."
H.R. Rep. 102-780(I).
Does this mean you can make copies for your family and friends, as long
as it's not "commercial?" A strict reading of the words in the statute
would seem to say that you may. This is not as outrageous as it sounds.
Part of the impetus behind the AHRA was the perception that blank tapes
were being used mostly to copy commercial musical sound recordings. As a
result, the AHRA provided that a royalty payment (referred to as a "DAT
tax" by its detractors) be paid for each sale of digital audio tape to
compensate authors of musical works and sound recordings for the profits
lost due to these copies. See 17 U.S.C. 1003, 1004. Arguably, the AHRA
anticipates and allows exactly this type of copying, and a literal
reading of section 1008 would tend to support this position. But the
AHRA is still sufficiently new this hasn't been tested in court yet.
Note, also, that this section applies only to musical recordings; it
clearly does not include spoken word recordings. Of course, it is still
possible that such a use of a spoken word recording might still be
considered a section 107 fair use (see sections 2.8 and 2.9), even though
section 1008 does not apply to provide a clear exemption.