This morning I am desperately trying to finish up this paper to turn in before I leave for Mobile. I had totally forgotten about it until the professor mentioned it in class last week, so I've been working on it since the weekend, but I can't seem to get beyond 6 pages. Maybe that means I have enough. Maybe that means I suck. Either way, I have decided to post my paper so all can enjoy its glory. Or so that someone can check it for me and let me know if it sucks.
The Recording Industry Association of America v. Scotti’s Record Shops
The Recording Industry Association of America is suing Scotti’s Record Shops for copyright infringement. We are called upon to decide whether Scotti’s Record Shops’ “Buy It, Burn It, Return It” policy violates the Copyright Act of 1976, and if Scotti’s is subsequently liable.
Scotti’s Record Shop has introduced a new policy of “Buy It, Burn It, Return It” to combat the growing market of downloadable music. Customers can buy a CD, take it home, listen to it, and burn a copy of it. If they return the CD within 10 days, they get a 70 percent store credit. Scotti’s claim is that this is simply a creative and effective way to revitalize the business of selling physical music and increase their revenue. The Recording Industry Association of America claims that the policy could be violating copyright law.
The Copyright Act of 1976 gives basic rights to copyright owners. A work can be copyrighted if it is an original work fixed in any tangible medium from which it can be perceived, reproduced, or otherwise communicated. For a work to be original, it must be created independently and not copied from any other work, while requiring some intellectual effort. As soon as a work is recorded so that it may be perceived, it is considered fixed in a tangible medium. This includes works such as paintings, movies on video tape, and music recorded on CD. Most of the artists whose records are being sold at Scotti’s own the copyright to the songs on those records, and in most cases, that copyright lasts for 70 years after the artist’s death.
The rights of copyright owners include the right to copy or reproduce a work, distribute copies of a work, create adaptations or derivatives of the work, and to perform and display the work publicly. They have the right to sell their own works, disseminate copies to the public, and make their works available online. Since copyright owners have the right to control copying or reproduction of a work, burning CDs would be an illegal action. The “Buy It, Burn It, Return It” policy could be considered encouraging customers to make illegal copies of their CDs. The customers who copy CDs and return them could therefore be liable for copyright infringement, even if they do not realize they are committing an illegal action. The copyright on the CD works as a warning so that infringers cannot claim that they infringed innocently. But the question is whether or not the store encouraging patrons to burn CDs makes them liable for copyright infringement, although they themselves did not copy CDs.
There are three different types of copyright infringement: direct, contributory, and vicarious. Direct infringement of a copyrighted work includes copying without permission or otherwise violating the copyright owner’s rights. If one knowingly contributes to another’s infringement or causes another to infringe it is considered contributory infringement. When someone has the right and ability to supervise the infringer’s activity and benefits from it, it is considered vicarious liability. It is not necessary that the infringer profit from the unauthorized copying of the work in order to be held criminally liable.
The “Buy It, Burn It, Return It” policy could cause Scotti’s to be liable for contributory copyright infringement, since the policy encourages illegal copying of CDs, which are covered under the Copyright Act. It could be said that Scotti’s is contributing to others committing infringement. It could also be said that they are profiting from customers’ infringement because of their increased sales and the ability to resell CDs that have been returned. Therefore, they could also be found liable for vicarious infringement.
The circumstance under which others can use someone else’s work without permission is called fair use. Fair use consists of 4 parts: the purpose and character of the use is not for money or is not intentional; the work is factual and therefore gets less protection than creative works; only a small part is used and the part used is not substantially important in the work; and the use of the work does not change the market value of the original by substituting for the original copyright work. If a customer were to buy a CD and copy songs onto another CD in the form of a mix for personal use, it may fall under fair use. Making a personal copy of a part of a CD is not for money, does not change the market value of the original CD, and does not use the entire work. Copying the entire CD and then returning it, on the other hand, does not fall under fair use because the copy is used as a substitute for the original work, and the customer profits financially by receiving a store credit. Therefore, the store is certainly encouraging copyright infringement by encouraging customers to burn CDs then return them. A policy that simply allows customers to sell back their used CDs may not cause the store to be liable for infringement, but the “Burn It” part of the policy tells customers that they are expected to burn the CD before returning it. Although the Supreme Court ruled in the 1984 Sony Betamax case (Sony Corporation of America v. Universal City Studios, Inc.) that VCRs, and by extension any similar technology, are legal to sell, the decision was changed slightly in the more recent case of MGM v. Grokster. Originally, those who sold such devices that could record copyright protected works were not held liable for any infringement committed by those who purchased the product as long as the product was capable of substantial noninfringing uses. In the Grokster case, however, the court held that one distributing a device with the objective of promoting its use to infringe copyright is liable for the resulting acts of infringement. Whether or not the company is liable depends solely on the intent of the company in providing the product. Because the intent of the Scotti’s “Buy It, Burn It, Return It” policy is for customers to burn the CDs, under this ruling they would be held liable for the customers’ infringement.
Scotti’s claims that allowing a customer to return a CD allows them to try out new artists and new music that they otherwise would not have. Although this may be true, the same result can be achieved by providing in-store previews of music, or even allowing the entire CD to be listened to within the store. Allowing the music to be copied instead hurts artists. Prohibiting unauthorized copying is a way to protect artists by protecting the commercial incentive to create new works that benefit society. Artists and other owners of copyrighted music are said to lose millions of dollars each year because of people copying music and sharing it with others. While allowing customers to test the waters in different types of music, they are in turn hurting the artists who produce the music.
One of the rights guaranteed by copyright laws is the authority to not only publish or sell their work, but also the right to loan or rent copies of it. The “Buy It, Burn It, Return It” policy could be considered a rental program in disguise. The customers take the music and bring it back in 10 days at a cost, making it just like a rental. Rentals of sound recordings without the copyright owner’s permission are prohibited because they are so easily copied and there is a great likelihood that they will be.
When a copyrighted work is first sold, the owner of that copyright receives royalties from that sale. However, the author’s control and receipt of royalties ends after the first legal sale of each lawfully produced copy. Therefore, although the store benefits from the “Buy It, Burn It, Return It” policy, the artists are actually losing money. The store can sell a CD once, have the customer return it, then resell it an infinite amount of times while the artist receives none of the profit after the first sale. Several customers may also put in money to buy a CD and make a large number of copies, further reducing the amount of first sales of CDs. That is the reason that rental of a sound recording is illegal: to protect the artists from such violations that would cause them to lose money.
The argument from Scotti’s would be that the artists are receiving the same amount of royalties from the CDs as they would have gotten originally, and the stores profits are going up and therefore keeping the CD industry lucrative. But Scotti’s should find another way to increase their sales other than encouraging customers to burn CDs illegally. Despite the fact that it is helping their business, it is nevertheless illegal.
In a March 2004 study by researchers at the Harvard Business School and the University of North Carolina, it was found that sharing music files over the Internet has not adversely affected CD sales. The study compares downloads of music files with store sales of those same songs. Although officials in the recording industry have blamed file sharing for the decline in CD sales in recent years, file sharing may not be the cause. This means that the decline in sales in Scotti’s stores may be due to something different entirely: a decline in the recorded music market altogether. According to Scotti’s, the best period of CD sales was the late 1990s, when hit albums by artists such as Eminem, Britney Spears and *NSYNC boosted traffic. Perhaps the music being produced in recent years is not good enough to attract customers.
The same study also raises the question of whether or not artists are actually suffering from file sharing and CD burning. Are the artists receiving fewer royalties because of music piracy, or due to the lack of a worthwhile product? Perhaps those who illegally download a song would not have purchased that same song anyway, but only care to have it because it is free.
Copyright laws were put in place to protect artists from having their work copied and distributed without their permission, regardless of whether or not the work is considered good. Therefore, the Scotti’s policy would still be considered promoting illegal copying. According to the facts presented, the "Buy It, Burn It, Return It" policy violates the rights of music copyright owners .It is the ruling of the court that Scotti’s Record Shops is liable for copyright infringement and must therefore pay specified damages.
