Who Really Owns Promotional CDs?

from the and-who-can-sell-them? dept

In my collection of CDs (and, yes, I still buy CDs), there’s a relatively large number of “promotional” CDs — many of which were purchased at independent record shops or online. It’s not uncommon at all to find such CDs for sale, despite warning labels that say that cannot be sold. I’ve often wondered how enforceable that claim is, and we may soon find out. Universal Music claimed copyright infringement against a guy who was selling promotional CDs on eBay and eBay took down the auctions. The EFF is now suing Universal Music, claiming that it’s a misuse of copyright law under the first sale doctrine (which says, like with any traditional good, you have the right to resell a digital good). Universal Music’s response is that the CDs are actually still the property of the record label, and merely licensed to whoever received it. Of course, that could open up a ton of legal questions about ownership of certain goods — especially if the receiving party never agreed to the deal. In the meantime, though, it’s yet another case that highlights the blurring lines of ownership over tangible goods as makers of such goods try to make them more like digital goods.

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Companies: ebay, eff, universal music

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Comments on “Who Really Owns Promotional CDs?”

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48 Comments
MadJo (profile) says:

Re: Re:

Not only radio stations hand out discs.
Also newspapers or magazines distribute promotional CDs.

BTW, it’s strange that they make a fuss out of this. It’s free promotion! Why are the media corporations so dead against free promotion?

One other strange thing in this discussion is this:
with CD-sales, you hear media corporations say: “You buy the disc and a licence to the music on that disc”.
Now, they seem to say “You only have a licence to said disc, and nothing more”… I find that incredibly hard to believe.

First sale doctrine also applies to free goodies everywhere, so also on discs.

If those media companies would give me a pen or a lanyard or a key chain for promotional purposes. I can then sell that to a collector.
It’s exactly the same thing.
So why should it be different for discs?

The infamous Joe says:

Best Medicine

I got a laugh out of the article’s rebuttal quote basically saying: Hey, it clearly says on the sticker that you can’t do that!

Now I’m going to have a bunch of “No Parking (except for Joe)” signs to place on the street in front of my house, so I still have a place to park when the people across the street decide to invite over every person they know.

Not to mention, I opened up a dictionary the other day and found out, to my dismay, that it says quite clearly that the book can not be recreated, in whole or in part, without permission from the publisher… but.. were I to send a letter asking permissison, I’d have to have permission!!

Anonymous Coward says:

Re: The rightholders are never payed for the promo

Ok, you state something that can be true and then use that as some argument that something is wrong. Just because the original people don’t get paid doesn’t mean someone else can’t make money off selling it.

People seem to have an odd sense that when it comes to music, that the creators (or really the labels… creators don’t get money for a lot of crap) have to get a cut of every single transaction that occurs. This is simply not the case.

Give us a good reason why the creator not getting paid means the people can’t sell the CD. You can’t use it to justify itself.

Frogpond says:

Am I Going To Jail?

Many years ago, a very large baking company left some English muffins on my doorstep. The bakery did not charge me for the muffins. The bag was cleary marked “NOT FOR RESALE- PROMOTIONAL ITEM ONLY” Now I am really concerned because I ate those muffins. Under this new doctrine, the muffins still belong to the bakery that left them on my doorstep. What if they want them back? Will I be sued? Did I have a license to eat them or was I just supposed to keep them on the countertop for others to see? I wish they had included some kind of license agreement in the package.

Anonymous Coward says:

Re: Re:

That’s sort of how people get around selling tickets that aren’t allowed to be re-sold (season tickets, etc.). They sell a t-shirt and say they’ll give away the tickets to the winner of the t-shirt. They’re allowed to give away tickets, they just can’t re-sell them. So, technically, this gets around that loophole.

MEoip says:

What?!

I made a radio commercial for my PC repair company in my commercial I shared a bit of friendly computer advice, “If you have a virus try downloading AVG virus software to remove it; If that doesn’t work give us a call and we will fix your computer.” Now the worker who recorded the commercial didn’t get paid for it. He gave out some free advice as a promotion, he didn’t get paid but if the promotion goes well he will get more than if it goes badly. It’s not my fault these guys signed a bad contract

p.s. I’ve thrown out a bunch of promotional CD’s over my lifetime and where I live I pay per trashcan I have picked up. So since I’m disposing of the record companies property they can send me $3 to cover my costs to dispose of their property.

Richard Ahlquist (profile) says:

Ok folks pay attention.

Listen, READ, don’t SKIM, they are talking a promotional CD, you CANNOT buy, purchase, lease etc a promotional CD legally because its record label property. Typically a promotion CD comes in a sleeve that announces its promotional material and that the label (universal, sony whomever) is merely letting you (the record store, radio station whomever) use it and that if at any time they want it back you must return it. It is common practice for promotional CD’s because they may have special cuts on them that may not appear on the albums. These items are not paid for by the original recipient so no transaction or contract closure has taken place so who knows the license may be relevant.

Sooner or later the morons at the studios will simply start keying these CD’s to individual recipients. Once they find a CD in the wild and match it to where it originated from they will cut that company off from promo materials forever. A costly mistake.

Anonymous Coward says:

Re: Ok folks pay attention.

dude, please…

whether or not the CD was sold/purchased has nothing to do with who owns it…plenty of things change ownership without any currency being involved

what makes is a promotional CD? Not the content, even if it is different, nor the fact that no money is asked for it. The only indicative element is the record company proclaiming it a promotional CD…

Bottom line: record companies give CDs, identical or different from the actual release, away for free hoping this will get the music played (in case of radio stations and others) and/or promoted in different ways (free publicity when for example newspapers give away those promotional CDs).

Whether or not I bought a CD or a company gives it to me for free does not change the rights I have. They can print whatever they want on those sleeves, if they give the CD to me, without entering into a specific contract with me, they can print on the sleeves whatever they want, it’s not legally binding…they can claim all they want about what rights they give to or withhold from me, that doesn’t make it legally true

The infamous Joe says:

Don't pay attention, give it away.

A costly mistake.

For whom? Is the promotional CD helping the record label, or the person they give it to for free? Is the secondhand sale of a few promotional CDs more costly than the amount saved from free publicity? I’d venture a guess that it isn’t.

Record Labels just want absolute control over the music so they can continue to make themselves a necessary part of the process.

Shadowside Music says:

Re: Don't pay attention, give it away.

Many of you seem to fail to realize that many arists, especially independent artists and labels, are not making millions of dollars. When a promotional CD has been sent to a radio or publication it is normally under sole license for broadcast or review, not resale. That CD has cost the label and artis money. Money has been paid to produce that CD. When someone takes that same CD, which has not generated any income for the artist or label, and sells it, the seller is the only one making a profit, at the artist’s and label’s expense. It is the same as if you worked a 40 hour job and someone else got paid for it, not you! Think about it. The composition means many hours of work for the artist, as well as engineers, guest artists, designers, just to name a few people trying to make a living. Trying to twist things around to pretend that what you are doing is not bad does not work. it IS a bad thing, period.

TheDock22 says:

This is dumb

I like my promotional cds, I have a few from my favorite band. I will not disclose how I got those though from RIAA and record label trolls.

Anyway, if a fan really wants a cd they will pay anything for it. The cds I buy are in the RCA catalog, so it’s a collection! Promotional cds are given RCA numbers, so why can’t I add to my collection if someone is willing to sell the cd to me?

Alienating your fans and burning bridges with radio stations is a bad way to do business.

That Guy says:

Pick the right spot in the chain to blame

Again it’s a case of picking the right place to blame. You don’t blame the guy who buy’s the CD. Half the time when they purchase it ( especially on ebay ) they may not be aware of any printed instructions regarding the use of the CD.

You can’t really blame the guy selling the CD’s because most likely he came into possesion of them via a legal means. ( contest winner or like Mike said purchased at a local store )

Who you can blame are the radio stations and other media who are given these items. You don’t have to be a rocket scientist or a deacon in your church to have the intellgiance or moral compass to know that the CD’s are for promotional use only. They aren’t for your personal gain, or even for your personal enjoyment, as a broadcaster or journalist you agree that if you get these free promotional items that your going to play the music promotion game, and promote them via reviews or air play.

If your not ok with that as a broadcaster or journalist, then don’t promote them. Tell the record labels you don’t want the free preview samples. Your media outlet can then just wait till the items are commercially availible and purchase the CDs and then do with them as they please.

James Stewart says:

The REAL story.... Written from a label guy...

Promotional CDs are marked as such for many reasons, and none of these have been mentioned in this article or the comments…

By marking CD as Promotions and “Not for Sale” the label can take a tax break on them. They’re considered advertising to some degree, and not potential income. They can take those as a loss, but still gain the benefit of the exposure.

The artist actually has to PAY for those CDs, as is stated in their contracts as “Free Goods”. It is considered a business expense.

If the Label were to GIVE the CDs away, there would be different tax implications, so by marking them as the property of the label, and returnable upon request, they retain this benefit.

So legally, they ARE the property of the record label. Cry all you want, bitch all you want, but it’s been that way since the beginning of recorded music.

This is an OLD story, written by someone with no knowledge of how the music industry works (as is typical these days, and so sad… )

—–

This is really nothing new. In the first days of radio, the DJs were given Vinyl records instead of the shellac records that the public would buy in the stores. That’s how the labels new they were the promotional copies. The Vinyl wouldn’t break when you were rough with it (which made it better for multiple plays, and DJ handling), whereas the shellac would shatter easily. Eventually, the public got a hold the Vinyl records, and demand grew for a product that was more durable, so Vinyl was made available to the public.

Then the record companies started using plain white sleeves and labels on the 45s to identify them as promotional copies. Some labels (including mine) even made the record a completely different color so they could easily identify the promotional copies.

Promotional copies are NOT supposed to be given away by radio stations! They are supplied with a large quantity of FREE, REGULAR CDS. The promo copies are for air play only.

This has changed slightly for each format that has come along, but the business practice has always been the same.

MAYBE WE SHOULD DEMAND MORE OF OUR WRITERS!

PERHAPS THEY SHOULD DO A LITTLE RESEARCH BEFORE TRYING TO STIR UP USELESS CONFLICT!

If something is MINE, you CAN’T sell it! Period.

—–

Well, I need to go do some work. Today I’m uploading several Platinum albums to iTunes so consumers can buy some of the best music ever made (Johnny Cash, and several others of that caliber), at a DRAMATICALLY reduced quality, for tons less then the music is worth.

Gotta love the music biz.

Don’t forget to support your local music scene!

Peace,

James

Mike (profile) says:

Re: The REAL story.... Written from a label guy...

James, thanks for writing in and also sending us an email that insults us. That was very nice of you. However, when you accuse us of not knowing what we talk about, it helps if you actually did know what you were talking about. You talk about the label’s position, but you don’t seem to understand either the legal or economic implications of what you’re saying.

Promotional CDs are marked as such for many reasons, and none of these have been mentioned in this article or the comments…

We know WHY promotional CDs are marked as such. But just because they’re marked that way for a reason doesn’t mean that it gives the labels made up legal rights.

Also, it’s nice of you to explain the tax loopholes that the labels are exploiting with these CDs, but again, that doesn’t change the way the law works.

So legally, they ARE the property of the record label. Cry all you want, bitch all you want, but it’s been that way since the beginning of recorded music.

The funny thing is that this is actually for the courts to decide, not you. You see, especially when it comes to copyright, just because the copyright holder *wants* something to be true, it doesn’t mean it is true. In fact, that’s what we’ve pointed out here on numerous occasions. Copyright holders seem to believe that copyright infers certain rights which it does not.

In this case, just because the label declares they still own the CD, despite giving it away, it doesn’t mean they really do own the CD. That’s what the lawsuit is about, and you simply declaring it one way doesn’t make it so.

This is an OLD story, written by someone with no knowledge of how the music industry works (as is typical these days, and so sad… )

Yes, it’s such an OLD story that it’s about a lawsuit that was filed this week. As for accusing me of having no knowledge, you are free to think that (incorrectly, but that’s fine), but it would help if you actually had your facts straight about the law and economics. You do not appear to, so it may be a sort of pot/kettle situation.

If something is MINE, you CAN’T sell it! Period.

I like how you brush aside the facts. The problem here (and the whole reason for the lawsuit) is that while you may claim something is yours, it’s not at all clear that it really is yours. That’s the key point in this lawsuit. In giving away that CD, while you still claim it’s yours, the law may disagree.

at a DRAMATICALLY reduced quality, for tons less then the music is worth.

Funny how you accuse me of not understanding the business, and then write this statement, which suggests you’re clinging to an obsolete view of how the recording industry (not the music industry) actually works. I’d also suggest you learn the concept of supply and demand.

nipseyrussell says:

“So legally, they ARE the property of the record label. Cry all you want, bitch all you want, but it’s been that way since the beginning of recorded music.”

….wait WHO’S crying and bitching??? pretty sure its the bitches at Universal doing that and barely putting a dent in said “problem”. keep pushing us and keep watching your sales…..mmmmm….drop!

Jasmine says:

Good for EFF I hope they win their lawsuit

As an Ebay music seller, I’ll tell you that the music companies can be really egotistical. I have made it a point never to list promotional or demo items for sale. I don’t give a damn about the legalities of it; I just don’t want to deal with arrogant pinheads.

I had a CD up for sale that didn’t have the word demo or promotional stamped anywhere on it. Within a day, Ebay had taken down my auction, citing a complaint from the holder of the copyright.

I responded to the link they offered, directing me to the ‘rightful owner’ of the CD, and I received in answer the most arrogant email I’ve ever been sent. It was from the legal department, and the idiot typed in ALL CAPS. ‘WE ARE SORRY THAT YOU HAVE A MUSIC CD THAT YOU BOUGHT AND ARE NOW ‘STUCK’ WITH. NEXT TIME YOU WON’T SELL PRODUCTS THAT ARE MARKED AS DEMO ONLY, NOT FOR RESALE.’

I never said I was stuck with the CD, only politely inquired how they could expect me to know this was supposed to be a demo when there were no markings at all, on the CD, on the case, or on the cardboard inserts. Nothing. Of course, the ‘legal department’ never answered me back on this. So I just threw the CD into the trash, where it probably belonged in the first place.

Unknowledgeable Geek says:

MS Action Pack

To bring this to an IT perspective, MS offers an item called the MS Action Pack. You have to purchase this product, but you are not able to resell it. It gives you all MS products for the year. It is a really good deal, like $400. But, you can give the software away and you have plenty of licenses to do it, but you are not allowed to resell it. It sounds as if this argument is on similiar lines.

Jasmine says:

Re: Legality of a Hole Punch

The bar code punch is (usually) a remainder mark, which means that the music company issued a ‘credit’ to a retailer for unsold merchandise. The music companies resell these unsold CDs to wholesalers/discount houses like MacFrugal’s.

As far as I know, and I’ve only been a music and book dealer for the last eight years, there’s no problem with selling an item that has a hole punch or a mark through the barcode. I always disclose this fact to my buyers and have never once had a problem with an unhappy customer.

That Guy says:

Physical vs IP

So lets take a parrallel to how a music magazine would write a review, and talk about how a car magazine would handle a car review.

The car maker would provide a car to the magazine for them to review. The magazine would then have the right to use the car, and produce articles, and photos of the car.

At no time though did the ownership of that car change hands. Those cars are then eventually picked back up by the car maker. No magazine editors took those cars to used car lots, and the magazine didn’t have monthly sweepstakes to give them away.

So what’s different about the record process?

a. The record label while claiming ownership of the physical and IP of the CD’s fail to treat the items as “loaned” assets, thus creating a unspoken idea that the CDs are given to the broadcasters and journalist.

b. The value of the CD is small. The CD value is probably not much more then $10. It’s hard for a broadcaster or journalist to feel that allowing a $10 item pass through their hands to someone else does any damage when your talking about an industry that generates billions of dollars.

But again, accountability comes back to the media outlet and record label. The record label has to have a contractual understanding with the media outlet in regards to the proper handling of those items. If the assets leave the media outlet in violation of that contractual understanding, then the enforcement needs to happen between the label and the media outlet.

Andrew D. Todd (user link) says:

Federal Laws Pertaining to Unordered Merchandise.

Here’s what Uncle Sam says, the United States Post Office, the guys in blue uniforms:

> A company sends you a gift in the mail–a ball point pen, a key chain, a tie. But you didn’t order it. What do you do? If you are the type of person this company is looking for, you may feel guilty about accepting the item without paying for it. Don’t feel guilty! It’s yours, and you are under no obligation to pay anything.

http://www.usps.com/postalinspectors/fraud/merch.htm
———————————————-
The Federal Trade Commission says (“A Business Guide to the Federal Trade Commission’s MAIL OR TELEPHONE ORDER MERCHANDISE RULE”):

> Unordered Merchandise
>
> Whether or not the Rule is involved, in any approval or other sale you must obtain the customer’s prior express agreement to receive the merchandise. Otherwise the merchandise may be treated as unordered merchandise. It is unlawful to:
>
> 1. Send any merchandise by any means without the express request of the recipient (unless the merchandise is clearly identified as a gift, free sample, or the like); or,
> 2. Try to obtain payment for or the return of the unordered merchandise.
>
> Merchants who ship unordered merchandise with knowledge that it is unlawful to do so can be subject to civil penalties of up to $11,000 per violation. Moreover, customers who receive unordered merchandise are legally entitled to treat the merchandise as a gift. Using the U.S. mails to ship unordered merchandise also violates the Postal laws.

http://blogs.mercurynews.com/consumeractionline/2006/07/unsolicited_mer.html
http://www.ftc.gov/bcp/conline/pubs/buspubs/mailorder.shtm
—————————————————-

How many multiples of $11,000 do you reckon Universal Music owes Uncle Sam? And that’s just the civil penalties. Those CD’s had better have been free gifts, or else some record company executives are looking at serious jail time.

Record Nerd says:

The label's desperation is showing!

I guess this just shows how pathetically desperate the labels have become. I was a record store manager for a long time, the store I was at “wouldn’t buy promos” since we got lots of co-op advertising money from the majors. As part of this deal, we didn’t buy or sell any promo cds at our store.

All that “deal” meant, in reality, was that the underpaid record store clerks would just take all the promo cds down the street to a nearby store that DID buy promo copies. This was a small but important source of additional income for lots of poor folks who were into music (being “into music” and “poor” seems to go hand in hand in many cases). Many of the music writers at the alternative newsweekly and papers/magazines about town (also broke) would unload their promos in this way to make a few extra bucks. Occasionally you would receive an “unmarked” promo, which could be worth a whole dollar or two more!

Of course, it was often a mad dash to get down to that store with your promo copy FIRST, because frequently whatever crappy band/artist the big label was trying to push would end up with multiple promos littering the used cd bins. If you were the third person to arrive with you copy of the new (insert shitty major-label act here) cd, suddenly it wouldn’t be enough to buy a taco. I often wondered why anybody would pay full price for one of these crap cds when you could pick up a promo copy at the used cd shop for a third the cost.

It’s funny, but the general opinion of most of the folks involved (record store clerks, music writers, etc.) was that anything that the major labels were pushing was PURE CRAP. We never even listened to these cds, but just snatched them up to sell them immediately, and used that cash to buy GOOD records. Most of these crappy major label acts did not sell, and each worthless promo copy represented the TENS OF THOUSANDS of dollars wasted on a band that was now back to waiting tables. And the indie-label records we would buy instead were probably recorded in a weekend and cost a fraction of the amount the majors wasted on lowest-common-denominator bullshit that didn’t sell.

Now, fast forward a few years, and the public has finally wised up and NOBODY is buying these crappy major label cds. Sales are in a free-fall. I’m glad I don’t work in a record store anymore. I can’t wait for the major labels to collapse.

I miss record shops, though. Searching for new music online is alienating and depressing.

monkey says:

So WHAT do you do with PROMO cds?

I end up with a lot of these promo cds from record companies and I usually don’t want many of them. I can’t sell or trade them, but can I *give* them away to friends or coworkers? What if *they* sell it? It sounds like the only thing to do with the cds is crush them up (because God Forbid a garbage man get one out of the trash) and throw them away.

Also, I keep hearing about the companies going after Ebay folks, but I see promo cds listed on Half.com sometimes and Amazon. Do the companies go after those people too?

So what do you guys do with PROMO cds you don’t want?

Some dude says:

The REAL story.... Written from a label guy...

“Well, I need to go do some work. Today I’m uploading several Platinum albums to iTunes so consumers can buy some of the best music ever made (Johnny Cash, and several others of that caliber), at a DRAMATICALLY reduced quality, for tons less then the music is worth. “

Fortunately, others have shared these CDs on the internet in full, lossless quality, for free, so that people can have this wonderful music without being ripped off by poor quality iTunes files and arrogant assholes like yourself. I enjoy being part of the process that will end your career.

Gotta love the music biz.

Andrew D. Todd (user link) says:

Automobile Reviewing.

At the time when new automobiles are reviewed, they generally exist only in prototype form– the assembly line is still in the process of tooling up, and the publicity is timed to send customers to the dealerships as soon as the new cars arrive, as soon as the main assembly line starts running. There will probably be about five hundred examples of the new model in existence– these will be the output of a kind of prototype production line, which exists to spot manufacturing snags ahead of time. This is not enough to permit the manufacturer to _give_ cars to reporters. What happens is that reporters are invited on all-expenses-paid road-trip vacations with the new car. The cars will have been given a special going over by the automaker’s mechanics, so they will be better quality than what the consumer gets. The journalists receive _gifts_ of things like designer clothing, expensive sunglasses, what have you, and of course the hotels and meals are suitably plush, not the kinds of places the journalists could afford to visit on their own tab. The publicity office keeps track of what the journalists eventually publish, and “rewards its friends.” The whole system is pretty much like radio “payola.”

Consumer Reports is in a class by itself, of course. Otherwise, the Wall Street Journal is about the only major media outlet which can insist that its reporters keep their fingers clean, forbidding them to accept bribes or freebies. A lot of the informal sanctions at a typical paper don’t apply to automobile reporters. The automobile and consumer goods reporters are axiomatically not in the running for the big prestige editorial posts, which are filled from either the city desk or the national desk. The automobile reporters are off in their own little ghetto.

The automakers are more respectable than the radio and recording industries, and they get away with more stuff over the long term.

Owen says:

My Uncle once said...

“Why make it easy when you can make it difficult.” The actual story behind it is different, but oh, it has great relevance to this.

It is evident that no one in the music industry cares about providing people the music anymore, but rather making as much money as possible and squeezing out every last dollar from all possible consumers. And in the mean time, they slap all these laws and regulations onto the products so that they are rendered “useless”. All this business of Copy Protection and no re-selling indubitably shows how paranoid the industry is about the whole idea of lending and sharing (or as they call it, “piracy”), and how they want to control everything that you do with the CD.

It’s all about being able to guarantee money in the pockets of the music label managers, producers and artists, regardless of whether the consumer is p*ssed off or not with their product.

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