Category: Consumerism

Apple Class Action Suit Reprises the “Digital First Sale” Conversation

I asked the question in 2014:  are we confused by the “Buy” button when we purchase digital media? And the issue is raised again in the class action suit against Apple earlier this year, which alleges that consumers are unsure enough about what it means to “buy” digital goods that online retailers should be held responsible for misleading us. The foundation of the lawsuit argues that the word Buy implies irrevocable access to the thing (e.g. a movie or game) being purchased and, therefore, Apple is engaged in deceptive practice when its Terms of Service state that the platform reserves the right to terminate accounts.

More broadly, legal scholars like Professor Aaron Perzanowski of Case Western University School of Law look beyond the possibility of deception by a retailer, arguing that the nature of ownership in the digital age has changed so dramatically that legislative action may be required. In a recent podcast inspired by the Apple litigation, Perzanowski told Sonny Bunch that a “soft” remedy to address confusion would be a requirement that online retailers of digital media provide better transparency about the limitations that may apply to buying digital goods.

But a more robust solution, Perzanowski argues, would be to amend the first sale doctrine of the U.S. Copyright Act; and it will surprise exactly no readers that I could not disagree more. The complaint against Apple provokes some interesting discussion but does not recommend even looking at copyright law, let alone changing it. For one thing, the claim may fail on the facts because purchasers of digital media from Apple are able to download those files and store them on their own devices. Hence, the “account revocation” argument may not hold up very well as the trial proceeds.

Digital First Sale

The first sale doctrine, originating as judge-made law in 1908, holds that once a copy of a work has been legally obtained, the copyright owner’s interest in that copy is extinguished. Thus, you may do what you want with your physical copies of books, movies, etc., except, of course, make other copies. Perznowski and other copyright critics allege, however, that digital purchasing is uncertain for consumers and that one remedy is to broaden the first sale doctrine to apply to digital copies.

Perzanowski and others argue that a “digital first sale” doctrine would be a way of, “Restoring genuine ownership,” and allege that the copyright owners “don’t like it because it creates pressure and competition.” Neither statement is quite true. In answer to the second statement, as the courts held in the ReDigi case, allowing a trade at internet scale in “used” digital works would not create a secondary competitive market but rather an alternative primary market in which used-goods prices are exchanged for material that is “used” in name only. (For a deeper dive, see posts here and here.)

But as to the notion of “restoring genuine ownership,” that may seem rational at first blush, but less so when we take a half a step back and consider precedent that would give meaning to the word restore in that statement.

What Does Buy Mean To Us?

While I understand why Perzanowski and others assert that the word buy implies a sense of permanent retention of the items we purchase, this isn’t always true. In fact, it’s hardly ever true.

Most of what we buy is consumed and replenished, and this includes various forms of media. In my lifetime, innovations just in the mechanics of listening to music have produced at least six major changes, rendering at least two forms of media (cassettes & 8-tracks) obsolete and relegated another two (vinyl and CDs) to niche products. For home viewing of filmed entertainment, the average VHS was trashed years ago, while stacks of DVDs are either gathering dust or have been sold for a few quarters at yard sales. And who knows how many paperbacks have been donated or destroyed in the last half century.

In fact, it is only the physical books on our shelves—especially the well-made clothbound books—that remain both intact and unaffected by technological obsolescence, and none of the changes that have occurred indicate that there was any deceit on the part of producers or retailers when we originally bought those older media. Meanwhile, the need to purchase a great deal of media today is obviated by subscription models that allow both streaming and download of large catalogues.

So, it may be true that digital life is changing the nature of ownership, but not because contemporary technologies have added unprecedented transience to our media products. On the contrary, the means by which we experience most digital media today (i.e. via multiple networked devices, rather than with specialized, individually owned physical objects) actually makes the current era the first in which consumers have good reason to expect indefinite access to their media purchases. What has changed, of course, is the nature of potential obsolescence.

For instance, if we download and store music files now, but those same files won’t play on computer devices in ten years, that would be a lack of continuity rather than a true disruption like the CD, which offered experiential changes compared to the formats it replaced. Hence the safer storage option may be to leave purchased titles in the online retailer’s cloud, which places the burden on Apple et al to maintain continuity of access—and they are presumably motivated to do so. In the other instance in which a 2032 device does not play a 2022 file, nothing in copyright law is going to alleviate that potential concern, though it is worth noting that we are still using many “old” file types like MP3.

No Reason to Expand First Sale Doctrine

Those who advocate expanding the first sale doctrine to encompass digital files often allude to hypothetical scenarios that are either too narrow or too off-topic to justify legislative action. For instance, Perzanowski referred in that podcast to the possibility that a copyright owner might one day try to prevent the inheritance of a computer device containing copies of works that were legally acquired by the benefactor. I would describe this hypothetical as an attempt to conjure a narrative that sounds like new legal territory but really isn’t.

The likelihood that such a claim would be attempted by a rightsholder, let alone succeed, is too speculative and uncommon to warrant prophylactic legislation, especially when the law, as it exists, already seems to answer the question presented. State probate law secures the right to bequeath a computer or hard drive to a beneficiary, and copyright’s first sale doctrine, though it does not explicitly encompass digital files, does state “copy.” Hence the transfer of specific “copies” stored on a device is not so exotic that the courts would be unable to imagine how the transfer would fit within the intent and function of the first sale exception.

Meanwhile, if there is any barrier (and there probably is) to inheriting accounts, perhaps that issue is worth addressing, but copyright is only tangentially implicated in that discussion. If a case can be made that our kids should be allowed to inherit our iTunes or Amazon accounts, or perhaps transfer our purchases to their accounts, that debate can be had, and perhaps some party can show enough potential harm to justify a legislative remedy. But again, any legislative response to that question may be very slow in contrast to market changes in which consumers increasingly don’t click on Buy buttons at all.

I cannot say whether millions of consumers feel instinctively misled by the word Buy in these transactions, but I can say that I have owned some of the digital music files purchased through iTunes for over fifteen years, which is already competitive with both my long-discarded cassettes and my rarely-accessed CDs. And none of that ownership means much because, as subscriber, I can stream or download everything in the catalog. So, I suppose we could ask whether buy is a euphemism for “long-term rental”? Perhaps. But in the grand scheme, that is kind of what it means to “own” most things.

Paywalls, vinyl, and other dead issues.

It’s been a longstanding bias of mine that the generation we call digital natives—the kids who’ve grown up practically hard-wired to the network—will steadily gravitate toward classic, analog, and tangible media and experiences, not merely as a fadish expression of hipsterism, but as a natural result of maturing tastes and dwindling leisure time.  One of the first posts I wrote for this blog, What I’d tell my own kids about piracy. Why scarcity is a good thing. made a case for the value of limiting one’s choices rather than indulging in a kind of media gluttony implicit in the presumed need to seek out illegal channels as though the legal ones had nothing to offer.  People shared that post a fair bit, homing in on the assertion that whatever is worth your time is also worth your money.

We are, of course, seeing some trends toward “old” experiences, like a renewed interest in vinyl records, which will not likely replace streaming and digital downloads but may indicate that fans are discovering (or rediscovering) that there can be more to enjoying recorded music than just hearing it.  Even the process of browsing in a store for LPs is one that I always considered a satisfying sensory experience prior to the invention of the CD. Like turning pages in a large picture book, with each album displaying about 160 square inches of cover art in contrast to the squinty 25 afforded by a CD jewel case.  I always liked that flipping through albums was a mostly silent activity other than faint woofs of air as one leaned each record forward. By contrast, the grating clack-clack of sorting through small plastic cases always sounded and felt to me more like work.

Once home with a new vinyl album one must perform a few steps in collaboration with a mechanical object, some motion which beg a gentle touch that imbues the preparation with an almost ritualistic quality, complimenting the sense of time set aside to listen actively to new music.  For all the convenience of digital access, it doesn’t always satisfy the human need to experience life beyond the perfunctory.  Fast food is convenient and cheap, too; but there’s a reason it doesn’t replace fine dining just as there is a reason a fine meal assumes a certain presentation and atmosphere to complement the meal.  And for experiences—yes, even content—that are truly desirable, people are willing to pay when that is the only way to have them.

Certainly, The New Yorker magazine is fine-dining as publications go, and it turns out that its readers are very much willing to pay for it—even online.  According to Jeffrey A. Trachtenberg at the Wall Street Journal, when The New Yorker began experimenting with a paywall that would go up once a visitor had accessed a limit of six free stories in a single month, readership increased rather than declined.  “Instead of deterring readers, the number of unique visitors rose to 9.7 million in October 2015 from 5.5 million a year earlier, the month before the paywall was implemented, …” reports Trachtenberg.

I can’t say I’m surprised that, despite the conventional free-culture “wisdom” that’s been shouted at the market for nearly two decades, we find evidence that consumers are not only capable of recognizing the qualities they want in “content” but are even willing to pay for it.  Granted, the readership of The New Yorker is a devout audience that has been cultivated for more than a century, and it is currently the only property in the Condé Nast portfolio to so far experiment with a paywall. But for the same reasons a new vinyl store opened in my local mall while other retail is shuttering, the market may yet prove that there is no one new, digital model that entirely disrupts and replaces all that has come before.  Just maybe the producers and consumers of high-value journalism, music, film, TV, etc. will be best served by various combinations of new and old that are a little more complex than just putting stuff out there, signing up for an digital ad service account, and selling merch on the side.

In contrast to The New Yorker, the equally venerable publication The Atlantic was the first to “go digital”, according to this 2011 article by Lauren Indvik for Mashable.  In January of  2008, The Atlantic dropped its paywall and developed a holistic, digital strategy for both publication and advertising.  As Indvik describes, the The Atlantic’s history as a platform for editorial made it a natural for the web, but the road to profitability involved a comprehensive and creative strategy to develop advertising “experiences” for premium brands across print, digital, events, and mobile.  “Digital has proved tough terrain for many traditional advertisers, who have been forced to compete against highly targeted search and display networks, such as Google’s,” writes Indvik.

Of course, the success of both The New Yorker and The Atlantic are entirely dependent upon the quality of the work on the page, even if the two entities commoditize distribution through different models.  And the only way to maintain that quality is either a sustainable high-value ad strategy or direct sales to consumers, or some combination of the two.  This was true before the free-culture rhetoric disrupted common sense, and it’s still true.

As New Yorker editor David Remnick says in the WSJ article, “Information doesn’t want to be free, it wants to get around freely.”  Or, as may be inferred from the renewed interest in the vinyl experience, maybe the creative and informative experiences consumers value cannot be described so homogeneously as “information” the way many tech-utopians chose to interpret part of Stewart Brand’s famous quote in order to justify devaluation of the work itself. Maybe consumers don’t demand that everything be free, just that it be good.

In a related story (as reported in The New Yorker of course), Kodak drew considerable crowds at this year’s Consumer Electronics Show in Las Vegas with the introduction of a contemporary version of the Super 8 camera.  Amid a bevy of entrepreneurs offering “smart” devices that consumers may prefer to leave “dumb”, Kodak’s debut of a new way to make old home movies on celluloid is an unexpected move that may actually work. Read the full story here.

Another Must Read

Thanks to a regular reader for linking to this article in Scientific American.  Were I to stop writing this blog today, this would not be a bad final note to leave because it very succinctly describes how the pursuit of targeted advertising (i.e. the brass ring of Web 2.0) has fostered a design that creates an illusion of choice.  While the Web industry promotes messages of populism, individual opportunity, and innovation, the truth is the money is all predicated on organizing the market (that’s us) into a limited number of paths based on data mining our profiles. Anyone who buys into the notion that the Web is all about elevating the rights of the many over the power of the privileged few should consider what this article implies and perhaps question why it is the Web seems to foster at least temporary monopolies in any given category.