Page last updated at 23:15 GMT, Tuesday, 3 June 2008 00:15 UK

Music firm 'goblins' in copyright war

By Robert Plummer
Business reporter, BBC News

It's not every day that record companies are accused of behaving like goblins in a book by JK Rowling.

Grubley the goblin from November 2006 edition of BBC's Jackanory programme
To a goblin, the rightful and true master of any object is the maker, not the purchaser
JK Rowling, Harry Potter And The Deathly Hallows

But that is just one of the more colourful accusations being bandied around in a US legal battle that could have implications for many people's private CD and LP collections.

It all began in May 2007 when Universal Music Group (UMG), the largest of the Big Four companies that dominate the music industry worldwide, sued a Los Angeles-based trader on the eBay online auction site.

The target of the legal action, Troy Augusto, runs a business called Roast Beast Music Collectables.

He makes his living by snapping up rare albums in second-hand record shops and selling them on eBay.

Universal is taking him to task for copyright infringement, saying some of the items he offered for sale online were promotional copies and not authorised for sale to the public.

But digital rights lobby group the Electronic Frontier Foundation (EFF) has taken up cudgels on Mr Augusto's behalf and is counter-suing Universal.

"UMG seems to think that the promotional use only label somehow gives it eternal ownership over the CD," says the EFF.

"While this might make sense to a goblin living in Harry Potter's world, it's not the law under the Copyright Act."

Not transferable

If, like Mr Augusto, you frequent specialist music shops or other outlets selling rare releases to collectors, you may have acquired promo albums or review copies that record labels send out to journalists and radio stations before the regular editions go on sale.

Nelly Furtado performing in the Radio 1 Live Lounge at the BBC's Maida Vale studios in London, 31 May 2007
The online auction included a Nelly Furtado promo CD

They can be recognised by markings such as "For promotional use only" or "Not for resale", visible on the record or CD artwork and sometimes on the disc label itself.

Record companies have long maintained that they continue to own these items and can ask for them back at any time.

Now, because Mr Augusto's online auctions contained some of these promotional discs, the argument is close to being tested in court.

In legal documents filed in the US District Court for the Central District of California, UMG's lawyers allege that "[Mr] Augusto's unauthorised distribution of the UMG promo CDs violated UMG's exclusive right to distribute its copyrighted works".

Among the promotional items listed as sold by Mr Augusto, according to the legal brief, are titles of CD singles by Nelly Furtado and rap group Bone Thugs-N-Harmony.

Listing removed

Although the outcome will apply only to US law, the case is being watched keenly in the UK, where record shop owners and eBay traders report similar treatment at the hands of music companies in the past.

One trader, who has asked to remain anonymous, told the BBC he recently had a promo CD removed from eBay that was on sale for a couple of pounds.

Promotional copies of LPs and CDs
We used to get so many promos of some records that we would end up turning them down
Zafar Chowdhry of now-defunct shop Reckless Records

"I was clearing out some cupboards and decided to list a CD single on eBay that had been handed to me by a friend quite some time ago.

"The very next day, the listing was removed and I was astounded to get an e-mail from eBay, bristling with terms such as 'illegal, pirated, copyright law, violation, content protection' and so forth.

"I can understand it if I had been selling a crateload of bootleg live CDs, or had burnt off albums worth of official studio stuff and was trying to sell them as if they were new and originals.

"There was also a sinister hint from eBay that if I ever put on a promo single again, then I could have my account with them suspended.

"This seems like both the record labels and eBay taking a hammer to a nut, although eBay are probably terrified of any action from the media companies."

Reading eBay's policy on promotional items does little to clarify the issue.

The UK version of the auction site says: "eBay policy does not specifically prohibit the listing of promotional items, but you should be aware that many rights owners take the position that the listing of such items is a copyright infringement.

"Listing such items could therefore result in the ending of your listing if a member of our Verified Rights Owner Programme (VeRO) reports the items as infringing their rights."

Ambiguous attitude

Clearly eBay is making efforts to comply with the record companies' wishes on the sale of promos.

The problem is that the companies' own attitude is, at times, ambiguous.

One long-established second-hand record shop, Beanos of Croydon in south London, fell foul of the major labels when it advertised promos for sale through one of its eBay outlets.

David Lashmar of Beanos record shop in Croydon
David Lashmar would like more clarity from the record companies

The shop's proprietor, David Lashmar, points out that the record industry seems happy to let promos from the 1960s or 1970s go up for auction, but has chosen to crack down on newer items.

"Back in 1992 or 1993, Sotheby's had on the front of their rare record catalogue a record by the Beatles, Love Me Do," he says.

"This was a seven-inch single marked 'promotional copy, not for resale' and it went for 15,000.

"Now I suggested to the Mechanical Copyright Protection Society that they might like to go back to Sotheby's and ask for the money back, because this is still subject to the same rules that modern promotional items are.

"We have sold recently, on eBay, many promotional records for tens of thousands of pounds in total. That doesn't seem to be a problem because they are 30 or 40 years old.

"Suddenly, if you are trying to sell something which is a promotional item made in the last few years, that seems to incur their wrath.

"Maybe we should sit down and decide where the break-point is when it becomes a collectable, non-promotional item any more."

Mastery of objects

Back in the US, the Electronic Frontier Foundation's case against Universal makes extensive use of JK Rowling's work, with a brief that begins with a lengthy quotation from Harry Potter And The Deathly Hallows.

"To a goblin, the rightful and true master of any object is the maker, not the purchaser. All goblin-made objects are, in goblin eyes, rightfully theirs," as Bill Weasley explains to Harry in the book.

"They consider our habit of keeping goblin-made objects, passing them from wizard to wizard without further payment, little more than theft."

It's an attitude that does seem to sum up the record companies' approach to promos - but it's far from clear whether the US courts will take the same view.




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