Promotional CDs and Ownership

June 16, 2008 in External Services with 0 Comments

This article caught my attention. A decision against Universal Music Group (UMG) who was attempting to sue an individual for selling promotional copies of a CD that was distributed on Ebay. The reasoning for the decision was interesting:

In dismissing UMG’s lawsuit late Tuesday, U.S. District Court Judge S. James Otero ruled that the promo CDs are gifts distributed by UMG, as they are mailed free and unsolicited to thousands of people without any expectation or intention of their return. The first sale doctrine says that once the copyright owner sells or gives away a copy of a CD, DVD, or book, the recipient is entitled to resell that copy without further permission.


I am not a lawyer, but I suspect this ruling could be applied to cases involving the selling of software. As an example, if one purchases Microsoft Office, you are purchasing the right to ‘use’ the software, you do not actually own it. I wonder if you could argue this decision as precedent setting? Could you sell your software to someone else? I am sure the licensing agreement would say you can not, but that doesn’t mean Microsoft would actually enforce it or be able to even if they wanted to.

Regardless, I think it is a moot point. For a while now, many companies offer versions of their applications that run on their servers remotely. For the last few years these services were offered to business customers that wished to outsource functions such as payroll, Customer Relationship Management (CRM) systems, Human Resources and other functions. With companies like Google offering online web applications such as GoogleDocs, these type of online software is being slowly offered to the end user. I suspect software eventually will be only available via an online service. Amazon Web Services and Google App Engine both offer virtual servers and data storage where you can design and deploy services, requiring only a computer and an internet connection to get started writing your own software. This is web 2.0!

Online software offers huge advantages to companies. The Company has complete control of the software version you run. They control the functional release, when you upgrade and apply bug fixes. They can charge any type of fee structure (yearly, monthly, pay per use) and enforce it. Security is much easier to manage as the company has control of the service and systems. They get to store your data. Monitor in much more detail how people use the software. There is no need to worry about CDs, DVDs, and other media being distributed or copied without the companies approval. This means no need to deal with legal battles over who owns what. The company will own and more importantly control the software.