I’ve had many conversations in the past with bands, songwriters, and even label reps about the practice of selling promo copies of CDs. Several of them have expressed frustration concerning the practice.

When a new CD comes out several hundred are usually slated for promotional use and sent to DJs, reviewers, etc. These discs are usually marked by having a hole punch taken to the barcode, and/or a label stating the uses for which the disc is authorized.

Before long, the promo copies start turning up in bins at used CD stores.

It costs money to produce a CD from start to finish. Each individual disc has a cost associated with it. The cost of the promotional discs is a factor, and it must be decided at the outset how heavily you wish to promote the project and the total number of discs you wish to make available for said purpose. There is a cost involved.

When a promo disc ends up being resold, it costs in two ways.

The first is the fact that the artist, label, and songwriter are seeing no revenue from the promo disc, so if someone purchases one instead of a regular CD, these parties all lose that income.

The second cost is in the loss of whatever promotional purpose that CD had been designated for. To be sure, it could have been a review copy and the reviewer could have done their job and then decided to clean out their office by taking all these discs to the used record store. In that case, the promotion was accomplished. But if it was a radio copy that ended up being resold, then the band has lost the promotional aspects of having that CD played on air.

The practice of selling these discs has always been looked upon as somewhat shady by the artists, songwriters, and labels. It was recently approved by a federal judge though, who ruled that such resale activities “are protected under the first sale doctrine.”

By sending the Promo CDs to music industry insiders, UMG transferred title to those insiders and the Promo CDs are subject to the first sale doctrine.

The first sale doctrine allows the purchaser of a copyrighted work to transfer (sell or give away) the copy of the work they purchased without obtaining permission from the copyright holder. If the work was not purchased though, but rather was sent out for promotion, the labels have always felt they retained rights of control on that copy. Promotional CDs we have received here at The Bluegrass Blog have come affixed with stickers to that effect. The labels attach this sticker and consider that a license for use by the recipient, but not title to the disc, which remains the property of the label. US District Court Judge, S. James Otero says otherwise.

UMG mistakes the music industry insider’s actions – keeping the Promo CDs – as accepting the license, when those actions are perfectly consistent with treating the merchandise as a gift. In fact, those music industry insiders whose Promo CDs ultimately ended up in Augusto’s possession affirmatively refuted the license agreement by transferring possession to somebody else, an act prohibited by UMG’s license language.

In essence, what the judge said was that giving away a copy for promotional use has the same effect as selling a copy commercially, insofar as the rights of the copyright holder are concerned.

We still urge you to support the bands, songwriters, and labels who create the music you enjoy, by purchasing a regular commercial copy of the product.