First Sale vs. “Fair Play”: The iTunes Music Store Gets Tested

Thanks to a provision in the 1976 Copyright Act, U.S. law allows the first purchaser of copyrighted material (a book, CD, etc) to subsequently re-sell that item without the copyright owner’s consent. In this age of online distribution and the budding, halting attempts at legitimizing it, is the the right to re-sell going to be upheld?On April 28 of this year, Steve Jobs unveiled the iTunes Music Store. It was billed as a convenient, legal alternative to file-sharing networks such as KaZaa and Morpheus, complete with 30 second track previews, one-click purchasing, virtually unlimited CD burning, spoken word content from, and comparatively light digital rights management (DRM) restrictions placed on what you could or could not do with purchased content.

Despite the fact that the iTunes Music Store was only available in the U.S., only available for Macs, and even then only available for Macs running OS X, it has proven to be significantly more successful than similar efforts such as Pressplay, MusicNet, or In fact, in the first day Apple’s service was available, the number of downloads equaled the total number of subscribers of competing services during the previous six months. Since then, Apple claims over seven million tracks have been purchased through the iTunes Music Store. By many accounts, it appears to be a hit. However, some growing DRM-related concerns are just now surfacing.

During Jobs’ announcement of the iTunes Music Store, he asserted that subscription-based services were not the best approach, and that “people have always bought their music”. Similarly, Apple’s own web site for their service proclaims “once you buy the music, you own it — no complicated rules, no clubs, and no subscription fees”. George Hotelling, an iTunes Music Store user, now aims to test exactly how Apple defines the word “own”. He is attempting to sell a track he legally purchased from the iTunes Music Store, via Ebay, to examine whether it is technically and legally possible to do so.

The track in question is Double Dutch Bus, featured on the soundtrack of Dana Carvey’s ill-received film, Master of Disguise. If Hotelling had purchased the actual soundtrack CD, he would have little difficulty selling it at or elsewhere. Since he is instead attempting to sell a digital audio file, encoded in the MPEG 4-based Advanced Audio Coding (AAC) standard, using Apple’s Fair Play rights management scheme, there are no shortage of potential issues that could block this sale. As such, this is less an auction over a 99 cent download, and more a pivotal moment examining how the long-enjoyed First Sale doctrine translates into the digital age.

The First Sale doctrine was codified in section 109 of the 1976 Copyright Act, and has been revisited numerous times since then. As the name implies, First Sale refers to the right of one person to sell their legally-aquired copyrighted material — such as a book — to another person, without the prior consent of the copyright holder. According to Duke Law & Technology Review, First Sale “covers transfers of ownership not merely transfers of possession, such as rental, lease or lending”. Since Apple has often stated that “once you buy the music, you own it”, it would be logical to assume that First Sale would apply. That is, unlike competing services, Apple has not stated that iTunes Music Store users are merely purchasing a license to listen a given track. If you buy music from Apple, it is apparently yours to do with as you please. Yet, Apple’s terms of service for the iTunes Music Stores specifies content is strictly for “personal, noncommercial” use. Confusing, isn’t it?

So, would selling a legally-downloaded AAC file purchased from the iTunes Music Store constitute personal, noncommercial use? Is it even possible, from a technical perspective, to transfer ownership of the song? Hotelling could certainly just burn it to a CD, then import it back to iTunes and encode it as an MP3, but he is intentionally opting not to do so. As such, it is too soon to tell if there is even a mechanism within the service that would allow this type of transaction. Music downloaded from Apple is tied to specific user accounts registered at the iTunes Music Store and, from there, is further tied to a maximum of three “authorized” computers. If Mr. Hotelling sells his track, and neither Apple nor the RIAA object, does this mean the new owner can also only play it on up to three computers? After all, this hypothetical new owner did not agree to any terms of service.

One way or the other, it was likely to be a significant fallout from Hotelling’s auction, if eBay wouldn’t take down the auction. An obscure, 99 cent track from an equally obscure film may end up being one of the most widely-known songs of the year, but in a manner entirely unintended.



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