iTunes
How Copyright, Contract, and Technology Shapethe Business of Digital Media – A Case Study
This paper provides an analysis of Apple’s iTunes Online Music Store. The exploratory case study presented in this document is research in progress. Comments and questions are encouraged. The paper analyzes relevant law to achieve deeper understanding of current shifts in the digital media landscape, but does
not
provide legal advice.
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Research Team
This paper is a case study developed by the Digital Media Project team at the Berkman Center forInternet and Society at Harvard Law School. Gartner|G2 served as our research partner in this venture. Particular thanks to Mike McGuire of Gartner|G2.
Digital Media Project Principal Investigator
William W. Fisher, IIIHale and Dorr Professor of Intellectual Property Law, Harvard Law School
Researchers & Authors
Urs Gasser, John Palfrey, Derek Slater, Derek Bambauer, Andrew Bragin, Jacqueline Harlow,Charles Hoffmann, Renny Hwang, Joseph Jackson, Georg Krog, Edward Locke, Stephen Mohr,Ivan Reidel, and C. Lee Wilson
Communications Director
Mary BridgesRelease Date: June 15, 2004(revised version)
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Contents
Contents.................................................................................................................................................3
Introduction...........................................................................................................................................6
Abstract.............................................................................................................................................................................6 A. Background.................................................................................................................................................................6B. Objectives and Scope.................................................................................................................................................7C. Overview of the iTunes Music Store......................................................................................................................81. Pricing......................................................................................................................................................................92. Song Catalog.........................................................................................................................................................103. Ease of Use...........................................................................................................................................................104. Digital Rights Management System..................................................................................................................115. Extra Features.......................................................................................................................................................12
Part I: Contract-Copyright Interplay.....................................................................................................13
A. Summary: Where Copyright Permits, Contracts May Prohibit........................................................................131. Copyright...............................................................................................................................................................132. Contract.................................................................................................................................................................14B. Effects of Contract versus Copyright Tension on iTunes.................................................................................15C. Copyright versus Contract in the United States..................................................................................................16D. Copyright versus Contract in Europe..................................................................................................................191. European Union...................................................................................................................................................19a. Copyright Regulation by the European Union...........................................................................................19b. Contract Regulation by the European Union............................................................................................20c. Contractual Modification of Copyright Entitlements in the European Union.....................................23d. Example: Copyright-Contract Interaction in Germany............................................................................232. Summary of Business Impact.............................................................................................................................24E. Copyright versus Contract in Asian Countries....................................................................................................251. Japan.......................................................................................................................................................................25a. Copyright in Japan...........................................................................................................................................25b. Contract in Japan............................................................................................................................................26c. Contractual Modification of Copyright Entitlements in Japan................................................................28d. Business Impact of Contract and Copyright on iTunes in Japan............................................................292. China......................................................................................................................................................................29a. Copyright in China..........................................................................................................................................29b. Contract in China............................................................................................................................................31c. Contractual Modification of Copyright Entitlements in China...............................................................32d. Business Impact of Contract and Copyright on iTunes in China...........................................................33F. Conclusion.................................................................................................................................................................33
Part II: Digital Rights Management.....................................................................................................35
A. Introduction..............................................................................................................................................................35B. How is DRM Protected by Law?...........................................................................................................................351. United States.........................................................................................................................................................362. European Union...................................................................................................................................................373. Asia-Pacific............................................................................................................................................................39a. Japan..................................................................................................................................................................39
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2. Potential Impacts on Labels for iTunes: How Copyright, Contract, and Technology Shape the Business of Digital Media
via The Harvard Berkman Center
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