Sales and Licenses

Via Charles A. Tan on Twitter I discovered this report of what might be a very significant legal ruling in the USA. The decision relates to how MP3 music files are sold, but as the article notes it could apply to any sort of download.

The issue is that traditionally content creators have been paid different royalties depending on whether their work is sold outright, or licensed for restricted use. Royalties for licensing are normally much higher. Lawyers acting for Eminem have argued (successfully now) that online downloads of their client’s work is licensing, not selling, and that therefore the higher royalties are due.

The key point here, however, is not that the music is sold (or licensed) online, but the terms of that transaction. If, like Amazon, you “sell” a book with DRM, and reserve the right to take it back at any time, that’s a license. If you sell it without DRM, and allow the customer to keep it forever, sell it on, load it to friends and so on, that’s a sale.

Of course what will probably happen is that media companies will start re-writing their contracts so that works sold under license no longer earn high royalties. So in the long term it won’t help your favorite authors or artists much to buy digital.

Of course you could always opt to buy your ebooks from stores that offer them DRM free and take a small cut of the sale price.

This entry was posted in Ebooks. Bookmark the permalink.

2 Responses to Sales and Licenses

  1. twilight2000 says:

    The most intriguing out of this is this part:

    The key point here, however, is not that the music is sold (or licensed) online, but the terms of that transaction. If, like Amazon, you “sell” a book with DRM, and reserve the right to take it back at any time, that’s a license. If you sell it without DRM, and allow the customer to keep it forever, sell it on, load it to friends and so on, that’s a sale.

    Because maybe it will encourage sellers to actually, ya know, *sell* me books? I’d actually BUY them then – it’s this “licensing” where they can steal it back that irritates the crap out of me.

    • And, in fact, if you look at the Kindle EULA, Amazon is very explicit that they are not handing over ownership of anything when you purchase an e-book, merely allowing you to access a service. You will find the same when you dig into the legalese at some other e-book stores as well.

      So it does come down to exactly the same point as made in the ruling: the store says it’s not really selling you ownership, ergo it’s a license.

Comments are closed.