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
H.R. Rep. No. 987, 98th Cong., 2nd Sess. 2 (1984).
3
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
17 U.S.C. § 109 (b)(1)(A).
6
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
Menell & Nimmer, supra note 3, at 159.
17
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-red-
herrings-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.
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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
Id.
40
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
42
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).
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
46
Id.
47
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.
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.