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"Michael H. Gray" <[log in to unmask]> writes:
>I'm curious to know how master tapes 'deteriorate' Is it in the physical 
>carrier or in the magnetic signal?

Both.  Depending on tape stock, materials and storage, the tape itself may
degenerate over time causing drop-outs or worse.  (There have been many
extensive discussions of the hydrolysis problem associated with tapes from
the 70s and 80s, for example.)

Also, magnetic tape recording itself is inherently unstable.  Those
magnetic domains don't just sit there for all eternity in the same
configuration as when they were recorded.  They are easily influenced by
temperature and external magnetic fields (including that of Earth itself)
and will tend to randomize over time.  If the tape was recorded at a high
level, layers of audio will print through from one to another and this
problem tends to get worse the longer the tape is sitting there. 
High-level recordings also have a greater tendency to exhibit increasing
distortion over time.

It goes on an on...

Some references here:

http://www.clir.org/pubs/reports/pub54/2what_wrong.html

http://www.sonicraft.com/guide.html

and there are lots more.

People like Richard Hess have spent substantial chunks of their lives
dealing with these issues and can give more detailed explanations than I
have time for today, alas.  It's all very interesting and can take down to
quantum mechanics, if you like!  (Aside from being an expert, Richard is
also a really nice guy!  If you need a tape transferred, go to him.)

--
Charles Lawson <[log in to unmask]>
Professional Audio for CD, DVD, Broadcast & Internet