Answer:
By the late 1980s, several manufacturers were prepared to introduce read/write digital audio formats to the United States. These new formats were a significant improvement over the newly introduced read-only (at the time) digital format of the compact disc, allowing consumers to make perfect, multi-generation copies of digital audio recordings. Most prominent among these formats was Digital Audio Tape (DAT), followed in the early 1990s by Philips' Digital Compact Cassette (DCC) and Sony's Minidisc.
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 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 and records with compact discs – to embrace a new music format. Second, device makers feared a lawsuit for contributory copyright infringement.[1]
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.[2] 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.[3]
The impasse was broken at a meeting in Athens 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 recorders in order to prevent serial copying. The recording industry would independently pursue legislation requiring royalties on digital audio recording devices and media.[4]
A year later the songwriter Sammy Cahn 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.[5] 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.[6]
With all the major stakeholders satisfied, the bill easily passed both houses of Congress. President George H. W. Bush 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 fairly rewarded for their tremendous talent, expertise, and capital investment. This will be accomplished by fairly compensating these artists for the copying of their works and by creating a system that will prevent unfettered copying of digital audio tapes."