CD Swapping Website Takes Advantage Of US Copyright Law 'Loophole'

by Glen Shapiro, LawAndTax-News.com, New York

09 March 2006

It emerged this week that a newly established online music portal will allow music lovers to trade used CDs with each other for a small fee, thereby taking advantage of a 'loophole' in US copyright laws.

La La Media, which has received financial backing from Bain Capital and Ignition Partners, according to reports, will permit members to trade CDs by post, and is expected to have around 1.8 million titles available.

Explaining the reasoning behind its business model, La La announced that:

"Trading CDs has always been legal under the first sale doctrine codified in the US Copyright Act. The doctrine allows the owner of a lawfully made CD to dispose of the possession of that copy without permission or payment of additional royalties to the copyright holder."

Payment for the service will be $1 per trade plus 49 cents shipping, with 20% of the projected trading revenue to be set aside for the compensation of recording artists.

In a message on the La La website, co-founder of the service, Bill Nguyen announced that:

"I'll be the first to advocate that artists should make a lot more from each CD. 'la la' is taking the unprecedented action of giving artists 20% of our revenues from used CDs; no used record store or online site does this today. I'll also promise to work tirelessly...to reduce overhead in marketing costs across the industry, so artists can make more from selling their music."

In an appeal to prospective users, he went on to add that:

"I ask you to do your part by doing the right thing: remove songs from your iPod or PC if you've agreed to send the CD to another member."

Although the recording industry has thus far remained closed-lipped on the new venture, La La has reportedly revealed that it intends to seek licences in order to sell digital music, and to allow members to purchase new CDs if the music that they want is not available to trade.

Recommended