Rent to Own

RENT TO OWN HOW THE RECORD RENTAL AMENDMENT OF 1984 ACTUALLY HURTS THE MUSIC INDUSTRY Joshua Jones1♦ It used to be that consumers could walk into a store and rent musical recordings, similar to how they go to movie rental stores today. The Record Rental Amendment of 1984 essentially eliminated the freedom of consumers to rent music, while still allowing for movie rentals. Without the repeal of this legislation, the music industry will continue to control the limited availability of rental music. Consumers are currently disenfranchised with the industry due to the unwillingness to embrace new cultural trends such as digital distribution. As the motion picture rental industry has seen, rentals can be extremely profitable. Other countries, such as Japan, have found ways to successfully implement rental programs and the United States should do the same. 1 ♦ Juris Doctor, May 2008, William Mitchell College of Law Edited by Jillian Block 49 50 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 Table of Contents INTRODUCTION .......................................................................................................... 51  I. THE HISTORY OF THE RECORD RENTAL AMENDMENT OF 1984 ........... 51  II. THE RECORD RENTAL AMENDMENT OF 1984 COULD NOT ANTICIPATE CULTURAL SHIFTS........................................................................... 53  III. RENTING MUSIC: HOW IT COULD WORK .................................................. 55  A.  Repeal the Record Rental Amendment.............................................................................................. 55  B.  Implement Rental Methods..................................................................................................................... 56  IV. THE INTERNATIONAL MODEL ........................................................................ 57  A. The Japanese Experience .......................................................................................................................... 57  B. TRIPS.................................................................................................................................................................. 58  CONCLUSION ............................................................................................................... 60  2008] RENT TO OWN 51 Introduction It is time for the Recording Industry Association of America (RIAA) to let go. The RIAA must stop fighting Congress, the copyright laws of the United States, and, most notably, their own customers if it is to turn itself around financially. More importantly, the RIAA must change its current position on the rental of music recordings if it is to ever restore its public image. One of the easiest and most effective ways the RIAA can accomplish this would be to petition Congress to repeal the Record Rental Amendment of 19842 and allow music to be rented again. Such an olive branch to consumers would immediately improve the RIAA’s public relations and, contrary to popular belief, with a sound strategy, could actually improve record sales. Part one of this article details the legislative history of the Record Rental Amendment of 1984. Part two explores the amendment, and other tactics the RIAA has used to try to control technology in the music industry, which failed to prevent the RIAA’s current fortunes due to cultural factors the RIAA will never be able to control. Part three recommends an implementation strategy for how the RIAA could begin allowing rentals for its music that would provide a new income stream and promote the Album format, while at the same time increase its music’s exposure. Finally, Part four provides an international perspective by examining the Japanese experience of renting music and how the TRIPS agreement actually allows for rentals and could affect a change in U.S. law. I. The History of the Record Rental Amendment of 1984 Prior to the Record Rental Amendment of 1984, the first sale doctrine allowed one who legally obtains a copyrighted work to distribute or vend the work without violating copyright law.3 This was modified by the Record Rental Amendment which made the rental of sound recordings, except for nonprofit purposes by libraries and educational institutions, illegal.4 The text of the Record Rental Amendment of 1984 reads: Notwithstanding the provisions of subsection (a), unless authorized by the owners of copyright in the sound recording or the owner of copyright in a computer program (including any tape, disk, or other medium embodying such program), and in the case of a sound recording in the musical works embodied therein, neither the owner of a particular phonorecord nor any person in possession of a particular copy of a computer program (including any tape, disk, or other medium embodying such program), may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord or computer program (including any tape, disk, or other medium embodying such program) by rental, lease, or lending, or by any other act or 2 3 H.R. Rep. No. 987, 98th Cong., 2nd Sess. 2 (1984). Nannette Diacovo, Going Once, Going Twice, Sold: The First Sale Doctrine Defense In Right Of Publicity Actions, 12 U. MIAMI ENT. & SPORTS L. REV. 57, 57 (1995). 4 Peter S. Menell & David Nimmer, Legal Realism In Action: Indirect Copyright Liability's Continuing Tort Framework And Sony's De Facto Demise, 55 UCLA L. REV. 143, 159 (2007). 52 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 practice in the nature of rental, lease, or lending. Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution…5 Prior to the amendment, many record stores would rent records to people similarly to how Blockbuster Video today rents DVD videos.6 Ironically, the impetus that eventually swept this practice away was a Ninth Circuit copyright case that involved movies, not music: the Sony Betamax case.7 The Ninth Circuit decision held that it was illegal for people to use their home video recording machines to record shows on television.8 There was an immediate public outcry after this decision.9 The public’s strong negative reaction was “reflected in editorial cartoons and commentaries by reference to ‘Big Brotherism’ and ‘video police.’”10 In response to this public backlash, Congress immediately introduced a number of bills to overturn the Ninth Circuit’s decision and exempt home video recording from copyright infringement liability.11 However, an opposing camp developed in Congress that actually favored the Ninth Circuit’s holding. To stem the rising tide against the Motion Picture Association of America (MPAA), Senator Mathias and Representative Edwards introduced legislation that would have established a compulsory license system for video recording devices and would have made it illegal to rent movies.12 In addition, both Mathias’ and Edwards’ bills modified the first sale doctrine to ban commercial music rentals as well.13 Ultimately, heavy political and lobbying efforts resulted in a stalemate between those in favor of completely exempting home video recording from copyright infringement liability and those in favor of stronger protections in the form of compulsory licenses and the outlawing of video rental.14 In the meantime, the Supreme Court decided to reverse the Ninth Circuit’s decision and allow for home video recording. This allowed Congress to sidestep the divisive issue.15 The only provision of either side 5 6 17 U.S.C. § 109 (b)(1)(A). Id. Records were rented from anywhere between 1 and 3 days for prices ranging from $0.99 to $2.50 per disc. Id. 7 Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963 (9th Cir. 1981), rev’d, 464 U.S. 417 (1984). 8 Id. 9 Mary L. Mills, New Technology And The Limitations Of Copyright Law: An Argument For Finding Alternatives To Copyright Legislation In An Era Of Rapid Technological Change, 65 CHI.-KENT L. REV. 307, 322 (1989). 10 Id. at 322-23. 11 Id. at 322. In fact, the day after the Ninth Circuit decision Representative Stanford Parris introduced an amendment to the Copyright Act which would have expressly provided that home video recording would qualify as a fair use. Menell & Nimmer, supra note 3, at 157. 12 Mills, supra note 8, at 323. 13 Id. 14 Menell & Nimmer, supra note 3, at 159. 15 Mills, supra note 8, at 324-25 2008] RENT TO OWN 53 that finally survived was the Record Rental Amendment of 1984 which made the commercial rental of music recordings illegal, but left the video industry untouched.16 Music rental stores could no longer operate in the United States. II. The Record Rental Amendment of 1984 Could Not Anticipate Cultural Shifts It would appear at first blush that the Record Rental Amendment of 1984 was a victory for the RIAA. The music rental stores certainly seemed to represent a threat to the RIAA’s bottom line since the music industry was not receiving the profits of these sales. Many of these rental stores even sold blank tapes alongside the rentals and some advertised “Never, ever buy another record.”17 These practices obviously contributed to the RIAA’s ability to persuade Congress to pass the Record Rental Amendment of 1984 while similar legislation regarding video recordings and the MPAA failed. However, looking back more than twenty years later, it appears safe to say that the RIAA won the battle but lost the war. Recall that the MPAA also wanted to ban the rental of motion pictures.18 Jack Valenti, President of the MPAA at the time, even suggested that “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”19 Valenti’s hyperbole notwithstanding, its defeat regarding video rentals has indeed proven to have been a blessing in disguise for the MPAA. The MPAA soon found that it had a substantial market to exploit through the home rental market and has gained revenues in the process.20 People obviously wanted to rent movies, and likewise wanted to rent music; however, the industry was not meeting their demands. Herein lays the RIAA’s biggest pitfall. It has attempted to impede, divert, and crush technologies that manifest what the consumers of their product actually want. The Record Rental Amendment merely forestalled the inevitable problems of the RIAA because, despite a cultural shift away from their business model, it seems bent on imposing its business model on their consumers. The resentment that this precipitated has almost certainly contributed to the RIAA’s shrinking revenue growth and infamous battles over piracy. The RIAA would desperately like for the world to go back to the early 1990s when the only way to obtain music was to purchase an entire album through a brick and mortar store. The RIAA seems to believe that its problems would be solved if people would simply go into a local store and buy a CD for $15.99. Unfortunately for the RIAA, consumers’ preferred methods for obtaining music do not fit into this neat mold. The album is in many ways a dying breed.21 Album sales’ precipitous fall within the last five 16 17 Menell & Nimmer, supra note 3, at 159. Id. 18 See note 11. 19 Menell & Nimmer, supra note 3, at n. 25. 20 Peter K. Yu, P2P And The Future Of Private Copying, 76 U. COLO. L. REV. 653, 747 (2005). 21 Eric Bangeman, DRM, lock-ins, and piracy: all red herrings for a music industry in trouble, http://arstechnica.com/news.ars/post/20070412-drm-lock-ins-and-piracy-all-redherrings-for-a-music-industry-in-trouble.html (last visited November 24, 2008). Bangeman notes that with the increase in digital distribution, consumers are now able to 54 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 years will not be replaced completely by legal digital downloads, and piracy is not the only reason.22 There are three main factors influencing the shift of consumer behavior which led to the RIAA’s issues: the desire for file sharing through systems such as Napster, the widespread popularity of digital music, and MP3 players such as iPods. These factors are part of a wider societal shift in the “dot-com” era. The shift occurred, and continues to persist, because in the Internet age, much of a company’s value now lies not in its net amount of sales, but instead on the amount of web traffic or “unique visitors” it can attract to its website.23 In order to attract these visitors, companies often provide services for free or at steeply discounted rates.24 In the bricks and mortar world this type of business model would be suicidal. However, there is plenty of opportunity within this model to make money, just as Google has done. The important thing is to be aware of the shift in consumer behavior and adapt to it. The RIAA is unfortunately a prime example of how not to accomplish this. The recording industry missed an incredible opportunity to capitalize on the music rental market, just as it missed an incredible opportunity to capitalize on digital distribution. Instead of being responsive to how consumers want to receive their music, the RIAA has chosen to fight tooth and nail to force consumers into the RIAA’s preferred method of distribution. This began with the Record Rental Amendment of 1984 which prevented people from sampling an album before purchasing it. Again, in 1999 the RIAA did not get ahead of the digital distribution model, and watched as the original Napster began turning an entire generation of music purchasers onto the idea of free downloadable music.25 Napster certainly did not invent MP3 technology so it was entirely technologically feasible for the recording industry in the late 90s to devise a system whereby people could legally download music to their computers. However, the RIAA provided no such service so that at the time people who wanted to obtain their music online had no choice but to do so illegally. Now Pandora’s Box is open and there is nothing the recording industry can do to bring things back to where they were pre-Napster. Today, illegal peer-to-peer music downloading is a way of life, as are digital recordings. The RIAA has responded by taking the extraordinary step of suing its own potential customers.26 Such tactics may make a bit of an impact, but as the continued sharing of songs illegally by the millions every day indicates, it is not shifting consumer expectations for free music. More importantly, these tactics are causing the music industry to lose the PR battle. Many, even in academia, firmly believe that media companies have lobbied for an unjustified broadening of copyright laws at the expense of the general public, and cherry pick the one or two songs from an album they really want without having to buy the entire album. Id. 22 Id. Bangeman’s article discusses the results of research by Enders Analysis, a British research company. 23 Andrew M. Kulpa, Distributing Yesterdays Media, Tomorrow: How Media Companies Mask Antiquated Operating Models With The Veil Of Copyright, 16 SETON HALL J. SPORTS & ENT. L. 225, 234 (2006). 24 Id. at 235. 25 Yu, supra note 19, at 658. 26 Kulpa, supra note 22, at 240. 2008] RENT TO OWN 55 advocate file-sharing as a form of civil disobedience.27 The RIAA’s image has been adversely impacted by its decision to dictate to consumers how they will receive their music instead of being attuned to what its customers want. The music industry first began down this path with the Record Rental Amendment of 1984 and should now begin to counter its negative perception by eliminating this archaic law. III. Renting Music: How it Could Work A. Repeal the Record Rental Amendment One way the RIAA could immediately begin to improve its public image would be to petition Congress to repeal the Record Rental Amendment of 1984. Admittedly, the rental of music is in all likelihood anathema to those in the music industry, especially given the battle during the last few years over digital downloads. But, recall Mr. Valenti’s alarmist position regarding video rental in the early 1980s; sometimes industries do not know what is best for themselves.28 As the success of Apple’s iTunes store indicates, people are willing to pay a premium for a safe I mean virus/spyware free, quality product even when free alternatives are available. However, even legal downloading services, such as iTunes, present a problem for the music industry because they encourage single track sales as opposed to album sales.29 However, by allowing people to rent music, the RIAA could very well resurrect the album, turn around its financial fortunes, and rejuvenate its public image simultaneously. Abolishing the Record Rental Amendment of 1984 is not so far-fetched when considering that the RIAA already employs rental as a strategy in its current online distribution model.30 The revamped Napster music service allows people to essentially rent music from the service for $9.95 a month.31 If a user then wants to burn a track to a CD it costs them an additional $0.99 per track.32 While the industry is allowing this type of rental, it does not allow those who have already purchased the music to rent it to others. Instead, the music industry keeps complete control over who can rent. The new Napster is a stunning indication of the premium consumers are willing to pay for choice.33 Consider that in 2003 the average price of a music CD was $15.06 which equates to roughly $1.16 per song.34 This information would make it appear that Napster is cheaper, but considering there are roughly three million members who have joined Napster, the average Napster user would have to download sixty-two songs per month to justify the $9.95 per month subscription fee.35 The data clearly indicates that people are 27 See Glynn S. Lunney, Jr., The Death Of Copyright: Digital Technology, Private Copying, And The Digital Millennium Copyright Act, 87 VA. L. REV. 813, 821 (2001). 28 See note 18. 29 See note 20. 30 See Kulpa, supra note 22, at 244. 31 Id. 32 Id. 33 Id. 34 Id. 35 Id. 56 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 willing to pay a substantial premium just to rent their music. Additionally, while the cost per song to download is only $0.99 per track compared to the $1.16 rough cost from a physical album, there were no production costs for the CD which further increases profitability. B. Implement Rental Methods The RIAA should capitalize on this willingness of consumers, not assume that they are all music pirates in waiting. If the Record Rental Amendment of 1984 were repealed, the music industry would likely see an immediate boost to its album sales as new businesses rushed to buy product to rent to new customers. The RIAA in all likelihood fears that fewer consumers would buy albums if they were able to rent them, or would take the album home and make a copy of it. However, these fears appear to be misplaced given the current times. First, if a consumer is dead set on illegally copying an album they would probably not go through the trouble of going to a music rental store to pay for the privilege. They would instead simply download the songs they want over the Internet using an illegal downloading service or even go to the library and check out an album to bring home and copy. However, it seems likely that the millions of people who will pay $9.95 for music they don’t even own, would be eager to rent an album for a few dollars they could actually listen to somewhere other than their computer. These people would then be able to sample an entire album and, in all likelihood, be exposed to album tracks they never would have heard otherwise if they had been restricted to the single track focus of their music subscription service. The next step, then, would obviously be to rent the album again, actually buy the entire album, or purchase the additional tracks from a music download service such as Napster or iTunes. In any event, the music industry would profit. It is also entirely possible that new web sites would be created, in the model of Myspace.com, which would be interested in purchasing music videos from the RIAA and then rent them to customers for use on their web pages. The infrastructure for renting music already exists and could be implemented rather seamlessly. ITunes, and other legal online music sharing services, already traffic millions of songs to consumers. As of June, 2008, iTunes had sold 5 billion songs and already allowed consumers to preview music tracks.36 It would obviously not be very far of a stretch to simply allow people to rent the tracks by using this increasingly popular distribution method. Contrary to the general belief, music rental could easily be implemented with very little effort on the part of the RIAA. Services such as the new Napster strongly indicate that there is a market for music rental, and current online distribution methods could easily be modified to permit music rental as opposed to outright sale. The RIAA continues to ignore this market at its own peril. 36 Press release detailing number of iTunes sold to date, http://www.apple.com/pr/library/2008/06/19itunes.html (last visited November 24, 2008). 2008] RENT TO OWN 57 IV. The International Model A. The Japanese Experience The RIAA has effectively propagated the idea that, if music rental were allowed in this country, Armageddon would soon follow and new music would vanish off the face of the earth. Notwithstanding these fear tactics, a look at the experience of the second largest music market in world, Japan, illustrates that music can indeed be rented without an exodus of new music. An analysis of the Japanese market is particularly appropriate given that Congress cited Japan back in 1984 when drafting the RRA when they warned of what could happen in this country if music rental were not stamped out.37 Upon initial review, the Japanese music market in the early to mid 1980s seems to confirm all of the RIAA’s worst fears concerning the rental of music. In the early 1980s almost twenty percent of record stores were rental outlets.38 In addition, 97% of rental customers admitted to making home copies of music they had rented and 61% admitted to loaning these copies or making additional copies of rental music to friends.39 This was all before the advent of the Compact Disc and its perfect digital reproduction. Therefore, it appears that the RIAA does have some legitimate concerns with music rental. However, a look at how Japan solved this problem would be very instructive for the RIAA. The Japanese consumer obviously wanted to rent music; the numbers illustrate that this seems to have been a preferred method of distribution for them, but the numbers also illustrate that rental was a very real threat to the music industry in Japan. This threat was not the cataclysmic menace the RIAA promulgates, but it was still a threat nevertheless. Japan’s solution to balance the interests of both sides was to implement a compulsory license system for music rental stores.40 Under this system, record rental stores were required to pay a royalty for each record or phonograph rented.41 This stream of royalties ensured compensation for musicians and record companies that may be lost due to consumer’s home copies. Just as importantly, this system allowed consumers to continue renting music instead of dictating to them how they would receive their music. There is some evidence that an unforeseen consequence of allowing consumers in Japan to continue to rent music was that the Japanese may have less hostility toward the music industry than their American counterparts. One example is the launch of Apple’s iTunes store in Japan. In the first four days after iTunes’ launch, the store sold over one 37 H.R. Rep. No. 98-987, at 2 n.6 (1984). The committee report states that commercial record rental establishments seriously hurt record sales in Japan. Id. However, the only evidence cited is that these rental establishments represented almost twenty percent of all record retailers. Id. The sheer volume of record rental stores apparently was the only evidence required. 38 Neel Chatterjee, Imperishable Intellectual Creations: The Limits Of The First Sale Doctrine, 5 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 383, 395 (1995). 39 40 Id. Id. 41 Id. 58 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 million songs outpacing its success in the United States.42 This would not make logical sense if we are to believe the RIAA’s stance. Since the Japanese are allowed under their copyright law to rent music, the RIAA would like us to believe that they are all rampantly burning CDs they have rented. So why would they then flock to iTunes to pay a dollar for one song when they could easily go to a record rental store, rent a CD for a few dollars, and then burn a copy that they could have forever? The answer may be what this paper has argued all along; iTunes is simply the distribution method which the Japanese consumers prefer. They don’t resent the music industry like American consumers. This may be because the RIAA denied Americans the rental distribution method that they likely would have come to embrace as full heartedly as their Japanese counterparts. In summary, the Japanese market demonstrates a few lessons. First, the RIAA is correct that there are some dangers in renting music because many people may indeed make copies of music that they rent. Second, despite this danger, there are creative solutions that can be utilized both to protect the interests of the music industry and consumers’ preference to rent music. Finally, not dictating to consumers how they will receive their music engenders much less resentment among consumers and facilitates a relationship that leaves consumers much more willing to buy into the music industry’s new distribution schemes as they evolve to meet consumer demand as opposed to fixating on old models. B. TRIPS The Record Rental Amendment of 1984 is not necessary in order for the United States to stay in compliance with TRIPS. The United States could amend the copyright act to allow music rental tomorrow and it would still be in compliance with its international agreements, just as Japan is. The World Trade Organization's Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) became effective on January 1, 1995.43 The TRIPS agreement is designed to “contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users . . . and in a manner conducive to social and economic welfare. . .”44 The TRIPS agreement accomplishes these ends in three ways. First, it provides minimum standards of intellectual property protection that member countries must follow.45 Second, the Kelly Leong, ITunes: Have They Created A System For International Copyright Enforcement?, 13 NEW ENG. J. INT'L & COMP. L. 365, n. 161 (2007). 43 Stefania Fusco, Geographical Indications: A Discussion On The Trips Regulation After The Ministerial Conference Of Hong Kong, 12 Marq. Intell. Prop. L. Rev. 197, 204 (2008). 44 Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Legal Instruments-Results of the Uruguay Round, vol. 31, 33 I.L.M. 81 (1994), available at http://www.wto.org/english/docs_e/legal_e/27-trips.pdf [herinafter TRIPS Text] (last visited November 24, 2008). 45 Sara Germano, Compulsory Licensing Of Pharmaceuticals In Southeast Asia: Paving The Way For Greater Use Of The Trips Flexibility In Low-And Middle-Income Countries, 76 UMKC L. Rev. 273, 278 (2007). 42 2008] RENT TO OWN 59 agreement has a broad enforcement section.46 This minimum enforcement standard “requires member countries to provide civil and administrative procedures, provisional measures, and criminal procedures to ensure IP protection.”47 Third, disputes among member countries over TRIPS are resolved through the World Trade Organization’s (WTO’s) dispute resolution procedures.48 The TRIPS agreement provides for the rental of various forms of intellectual property subject to numerous exceptions. Rental rights in the TRIPS agreement are covered in Article 11.49 This rental right provides the author with another exclusive right similar to the section 106 rights in the United States such as the right of reproduction, distribution, public performance, etc. However, it initially appears that only authors of computer software and cinematic works are provided this rental right through TRIPS, and even then these rights are not absolute.50 For example, authors of cinematic works are not entitled to a rental right in their work unless it can be demonstrated that commercial rental activity entails “material impairment of the exclusive right of reproduction of right holders.”51 Thus, the United States is not in violation of TRIPS for not providing authors of cinematic works a rental right because the commercial rental of music is actually a boon for those authors and does not impair the reproduction right. Music rental is covered in TRIPS in a more roundabout way. Article 14 of TRIPS grants a rental right to authors of phonograms by stating that “article 11 applies mutatis mutandis to producers of phonograms and any other right holders in phonograms so conferred under domestic law.”52 There is also an exception to this rental right in phonograms. Countries that already “subject the rental of sound recordings to a system of equitable remuneration may continue this practice,” again, as long as the author’s right of reproduction is not impaired;53 however, other states are not required to follow suit.54 This seems to squarely be aimed at Japan which, as discussed above, employs a compulsory license system for its music rental stores. In any event, TRIPS certainly envisions a world in which music is able to be rented. Its provisions are not prohibitory; instead, authors are simply given a rental right in which they may seek remuneration for their works that are rented at commercial establishments.55 Therefore, it appears there are at least two ways in which the United States could allow music to be rented in this country while not violating TRIPS. First, the U.S. could add the rental right in sound recordings to the exclusive rights contained in Id. Yoshifumi Fukunaga, Enforcing Trips: Challenges Of Adjudicating Minimum Standards Agreements, 23 Berkeley Tech. L.J. 867, 877 (2008). 48 Germano, supra note 44, at 278. 49 J.H. Reichman, Universal Minimum Standards Of Intellectual Property Protection Under The Trips Component Of The Wto Agreement, 29 INT'L LAW. 345, 366 (1995). 50 Id. 51 Id. at 367. 52 Alexander A. Caviedes, International Copyright Law: Should The European Union Dictate Its Development?, 16 B.U. INT'L L.J. 165, 204 (1998). 53 Reichman, supra note 43, at 367. 54 Id. 55 Caviedes, supra note 49, at 204. 46 47 60 INTELLECTUAL PROPERTY RESEARCH SERIES [VOL 1:1 section 106 of the copyright act. Another option would be to provide a compulsory license scheme, similar to that offered in Japan. The advantage of the first option is that it allows authors to opt in or out of the rental system and would not subject rental businesses to added costs that may not be necessary. For example, nobody would suggest that movie rental outlets pay a compulsory license to movie studios because the business is immensely profitable for the movie industry. Likewise, if the rental of music actually made the music industry money, a compulsory license would be unnecessary and unfair because the music industry should not receive a windfall from rental outlets when these same outlets will likely produce an additional revenue stream for the RIAA. The disadvantage of simply giving authors a rental right would be that many may choose not to allow their musical works to be rented which obviously would not accomplish the end result argued by this paper that music should be allowed to be rented. I am afraid I don’t see why the argument is circular. The author has already decided to disseminate the work so I don’t see the legitimate reasons for them not allowing the works to be rented. A filmmaker does not get to decide if his movie can be rented. However, perhaps market forces would force artists to allow their works to be rented since to deny their fans the ability to rent their works would hurt their PR. Conclusion The RIAA must let go. It cannot continue to treat its consumers as if they are immoral pirates just waiting for an opportunity to take advantage of an opening. As the popularity of iTunes indicates, consumers do have a conscience and will pay for what they believe is fair even when the free alternatives available often provide more choice. However, the RIAA has lost a substantial part of the current generation of customers due to its own missteps. Consumers for years resented having to pay $15.99 for a CD that contained at most one or two tracks that they actually wanted. Rental was not an option because of the Record Rental Amendment of 1984. Then, once the Internet revolution began, the RIAA dragged its feet and millions of people flocked to illegal digital downloading when no legal alternative was available. The RIAA cannot undo some of this damage, but allowing consumers to rent music again would go a long way toward healing some of these wounds and repairing the music industry’s image. It may also be one of the last shots the RIAA has to save the album format before the single track online distribution model renders it completely obsolete. It is time for the music industry to start providing its customers with options instead of subpoenas. Renting music would be a good start.