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If you’re a music fanatic, you almost certainly still own the music of your youth. Depending on your age, you have your favorite performers on vinyl, eight track, audiocassette, or CD. If you’re a Beatles fanatic, you’ve probably bought the so-called White Album two or three times as newer media became popular. But if Microsoft has its way, “owning” music will be a thing of the past. By now, you’ve probably noticed the recent popularity of portable music devices like Apple’s iPod — a portable music player capable of holding between 1,000 and 10,000 songs depending upon capacity — and MP3 players from a variety of manufacturers. With such devices, it is now possible to store music collections, otherwise filling hundreds of CDs, in your pocket. Given the tremendous popularity of these devices, it is no wonder that Microsoft has jumped on the bandwagon. Enter Janus, Microsoft’s new digital rights software, which is named after the two-faced Roman god. The Redmond, Wash.-based software giant claims Janus promotes the mobility of digital music while combating the rampant problem of piracy. According to industry news service Slashdot, a wide variety of companies — including AOL, Dell, Disney, Napster and a Motorola subsidiary — have approved the concept of Janus. With Janus, instead of owning a copy of a song or album, you rent it. The technology causes digital music to expire after a fixed period of time. Under Microsoft’s scheme, paying rent will give users of the service access to hundreds of thousands of titles for as little as $10 a month. From the consumers’ perspective, the downside is that you don’t actually buy the rights to maintain a copy of the music indefinitely. The view of intellectual property rights reflected in Janus is consistent with Microsoft’s overall approach to software licensing. Over the last few years, Microsoft has changed its licensing agreements. Computer users formerly would buy a copy of Microsoft Office from a local computer shop and use that copy indefinitely. Microsoft’s more recent licensing schemes are subscription-based. This shift is not unique to Microsoft. Other software industry giants, including Adobe and Novell, have tried to characterize their sale of software as “licensing,” where the user doesn’t own the particular copy, rather than a “sale,” where the user does own it. This shift has been the subject of considerable litigation over the last few years. Microsoft and other companies may claim that they never sell their software, but this contrasts sharply with most users’ experience. In a typical transaction, consumers walk into a computer store, buy a software package off the shelf, pay sales tax on the transaction, and go home thinking that they own the particular copy. Despite this reality, software companies claim that they don’t sell software. DIFFERENT FROM BOOKS? The distinction between a license and a sale is critical. Under the federal Copyright Act, the owner of intellectual property loses the ability to control subsequent distribution of copies that are sold. It is this force in the law — called the first sale doctrine — that permits individuals who buy a copy of a book to give the book away after reading it. This right gives people many options for disposing of the book. But if the copy of the book was licensed rather than sold, the publisher could require the reader to return the licensed copy of the book to the bookstore after it was read, or after a defined period of time. In recent years, a handful of courts around the country have looked at the issue of whether companies like Microsoft license or sell their software. The recent trend — if a handful of cases can be called a trend — is to examine the circumstances surrounding a transaction and determine from those circumstances whether the transaction is a license or a sale. Much to the chagrin of software manufacturers, courts have found that a “sale” took place despite the fact that the software company called the transaction a “license.” The matter is fraught with legal paradox. At the same time that software companies are trying to describe their sales as licenses, the very fact that the software was sold is what makes the typical software license agreement — often called the shrink-wrap license agreement — enforceable. In reality, there’s no reason to treat software any differently from a book. Despite this, software publishers have done their best to differentiate software from books and music. DISPOSABILITY, NOSTALGIA With the advent of Janus, Microsoft now is trying to bring its philosophy of software licensing to music. While some industry analysis have suggested that this new technology may severely cut into the market for Apple’s iPod, not everybody is on-board with Microsoft’s plan. At the same time that Microsoft is pushing the rental approach to digital music, Cupertino, Calif.-based Apple is well on its way to cornering the digital music market. In simple terms, Apple’s approach is similar to more traditional music ownership. Following the initial success of its iPod, Apple started selling digital music for 99 cents a song through its iTunes Music Store. The rates for entire albums also were lower than you might otherwise pay in a local music store. Under Apple’s approach to digital music, you can buy individual songs and download them to your computer. Once downloaded, you can transfer the songs to a digital music player, like an iPod or MP3 player, or burn the songs onto a CD; iTunes allows you to authorize up to five computers to play purchased songs. Thus, Apple’s approach permits a certain amount of flexibility while still attempting to protect the music from illegal copying. And unlike Microsoft’s Janus, songs downloaded from Apple’s iTunes store do not expire with the passage of time. In the first year alone, iTunes sold more than 70 million songs. In the process, Apple cornered about 70 percent of the digital music market. Which approach is the right one, Microsoft’s or Apple’s? Like music itself, that comes down to personal preference. If you want access to thousands of songs and don’t mind the concept of renting — or don’t care that you won’t be able to play the song in a few months — Janus may be the way to go. But if you’re comforted by the thought that you can pull your favorite record, tape, CD off the shelf anytime you want, check out iTunes. If you do, you may be able to buy your favorite Beatles songs for the last time. Samuel Lewis is a partner at FeldmanGale (www.fgwlaw.com) in Miami, where he practices computer/Internet law and intellectual property law. He is also an adjunct professor of law and teaches computer law. He can be reached at [email protected]. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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