We click “Buy Now” and pay with our credit card, but that electronic book is not ours. Neither are the movies, games, or music that we download to our devices.
Traditionally, if we buy a book, we own it. We enjoy the rights that come with ownership. We control how we use the book. We can enjoy the book any way we want—read it anytime or as often as we please; we can lend it, copy it, resell it, donate it, give it, or will it to others. No one can just take it away from us and we can keep it as long as we want.
The law recognizes and protects our property rights and we can avail of criminal or civil action against violators.
But our digital purchases do not confer us any rights of ownership.
“Our data demonstrate that a sizable percentage of consumers is misled with respect to the rights they acquire when they “buy” digital media goods. They mistakenly believe they can keep those goods permanently, lend them to friends and family, give them as gifts, leave them in their wills, resell them, and use them on their devices of choice.” (Aaron Perzanowski & Chris Jay Hoofnagle, What We Buy When We Buy Now, University of Pennsylvania Law Review, 2017)
This misconception is propagated openly by online stores. Apple sells movies with “Own it now in HD”; Amazon offers books in Hardcover, More Buying Options (used & new), and Kindle Edition; music on iTunes has a click button “$9.99 Buy” with an option “Gift this Album”. All choices lead the buyer to think that he owns his purchase and can exercise the same rights of an owner of a physical media.
A US online survey found that after they clicked “Buy Now” for digital music, 83% believed they owned the music, 89% believed they could keep it forever, and 88% believed they could play it on any device of their choice. For eBooks, 86% thought they owned it, 87% thought they can keep it forever, and 81% thought they could read it on any device. (Perzanowski & Hoofnagle)
“A sizable majority of respondents—just over 83%—believed that after clicking the Buy Now button, they owned the digital good in question.” (Perzanowski & Hoofnagle)
Ownership confusion is prevalent given digital media’s recent boom worth$96.695m in 2017 worldwide, with the largest segment in video games worth $52.36m (Statista).
For the first time, digital revenues for all media reached 58% in 2016, which consists mostly of subscriptions and a decreasing fraction in downloads. Digital surpassed physical formats of music, video, and games, which all decreased by an aggregate of 15% (Entertainment Retailers Association).
Only vinyl LP sales continued its global revival with an increase of 56.4%, with 13 million units sold in the US alone, an increase for the 11th consecutive year in 2016.
“Aside from the appeal of higher fidelity and better packaging, when you buy a record you are bargaining for the full range of property interests associated with a purchase, rights that are not contingent on license terms, digital permissions, or even Internet connections.” (Aaron Perzanowski & Jason Schultz, The End of Ownership, 2017)
Digital Music
The global music industry had its highest market growth at 5.9% in 2016 with $15.7 billion in revenue. It finally recovered from its 40-year slump since the 1987 US stock market crash, when pirated copies, file sharing, and free downloads were rampant.
Digital music sales are now 50% of industry revenues, while physical sales shrank to 34% (International Federation of the Phonographic Industry or IFPI).
Streaming now drives the the music industry’s 3.2% global growth and make up 59% of digital revenues now worth $15 billion (IFPI).
Streaming music can be free, if you endure ads, or for a monthly fee and allows users to avail of a vast library and create their own playlist to play on a limited number of their electronic devices. There are about 97m subscribers in the world and 112m active users (IFPI).
Spotify, created in 2011 by a Swede, dominates music streaming with 50m subscribers and 100m active users in 60 markets. Apple ranks second with about 21m subscribers.
License to use
The music industry argues that consumers do know that they don’t own their music.
“If you ask people when you go to a site to buy a movie or a book or a song, I think they pretty much understand that you’re not actually buying the copyright. What you are doing is you’re purchasing or buying a license which permits you to do certain things,” said Ben Sheffner of the Motion Picture Association of America.
Digital buyers don’t expect to buy a copyright, but they do expect to exercise their rights as an owner of their purchased personal property—the right to use, control, keep, and transfer their digital media.
In 2009 Amazon unilaterally removed George Orwell’s 1984 and Animal Farm from all Kindle readers. A US highschool student sued Amazon because it also erased his school notes on 1984. He won, but it sent a clear message that our ebooks are not ours to control nor keep. Amazon retains the right to wipe out purchased ebooks subject to certain conditions like a court order or a user’s failure to pay.
As for keeping music forever, the hardly-read Terms of Use states that Spotify “reserves the right periodically, and at any time, to modify or discontinue, temporarily or permanently, functions and features of the Spotify Service, with or without notice, all without liability”. Users are merely granted “a limited, non-exclusive, revocable licence” and we cannot redistribute nor transfer our Spotify content, even if we created it.
Yet Spotify can license our content as they please—share it, transfer it, sub-license it—all royalty-free worldwide forever where allowed, or for 20 years after our subscription ends.
Buying digital media is usually limited to the device it is downloaded to. Purchases on the iTunes store can only be played on Apple devices. Spotify playlists can be stored only on three devices. Video games are played in one particular console. Purchased movies are stored in one digital video recorder. Although, consumer demand allows Kindle and Nook readers restricted ebook lending.
But if we suspend or end our subscription, stop payment, or change providers we usually lose all our digital purchases.
If we knew that we did not own what we thought we bought, we might not have paid for it in the first place.
“Not only are consumers misled, they are misled about ownership rights that are important to them. A sizable percentage of consumers express a desire for those rights and many say they are willing to pay more to preserve them. Importantly for retailers and copyright holders, respondents in our study indicated that they would turn to streaming services and BitTorrent if they were unable to engage in the uses typically associated with personal property ownership.” (Perzanowski & Hoofnagle)
We don’t own our digital books, videos, or music
Informed digital consumers have the power to change policies.
“No doubt, changes in the way we acquire, use, and share goods are underway. And they will have a profound effect on our culture. But those changes should take place in the open. Individuals should be fully aware so they can make thoughtful, deliberate choices. That only happens if they have accurate information. Netflix and Spotify subscribers understand that once they stop paying their monthly fees, the movies in their queue and the music in their playlists go away. But we can’t say the same for a la carte digital purchases.” (Perzanowski & Schultz)
“But as more people understand the limited value that downloads offer, we shouldn’t be surprised to see steeper decreases in digital sales revenue. If digital sales were sales in the true sense of the word—if they were transactions that gave users property rights—we might see very different consumer behavior.” (Perzanowski & Schultz)