The Lawletter Vol 41 No 10
The average layperson might assume that digital music files (i.e., songs purchased from services such as iTunes and Amazon) can be passed by will or intestate succession. This is certainly true for music recorded onto physical media, such as CDs. However, the law currently treats digital files differently, given (a) the manner in which digital music is purchased, (b) the use of multiple digital files when accessing digital music files, and (c) the perishable nature of nondigital media.
Because most consumers never read the "Terms & Conditions" agreements when purchasing digital music, they may be surprised to learn that when buying a song from iTunes or Amazon, the purchaser is not granted ownership of the downloaded song file, but merely acquires a nontransferable license to use the file on the purchaser’s device for the contract duration. Thus, by contract, such files cannot pass at the death of the purchaser, as the usage license is nontransferable to other persons.
Digital music services have justified the new ownership regime based upon the manner in which digital music is accessed and played, as well as the non-perishability of digital files. Digital music providers argue that the digital file is necessarily "copied" each time it is accessed from the purchaser's device, the "cloud," or when streamed from the service-provider, so that the seller rightfully structures consumer access of the purchased music files as a personal, non-transferable license to access such usage "copies" during the term of the contract.
In comparison, a CD contains one particular copy of the song, such that the material object containing the recording can properly be owned by the purchaser as well as sold to another via the "first sale" doctrine. The one federal court that has addressed the applicability of the traditional "first sale" doctrine in regards to digital media held that digital music files could not be sold, because the sale would by necessity require the transfer and copy of the copyright-protected computer code to some new device, a transfer prohibited under the license agreement. See Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640 (S.D.N.Y. 2013). The court also observed that "first sale" should not apply to digital audio files because such files do not physically degrade like traditional music media.
At least one state legislature is considering a bill that would prohibit digital media providers from including contract terms that limit the right of purchasers to transfer their digital media accounts to their will beneficiaries or intestate heirs and mandates that digital media providers provide the decedent's I.D. and password for digital media accounts so these can be transferred to the rightful at-death takers. See S.B. 641, 28th Leg. (Haw. 2015) (adjourned sine die). Major industry representative The Motion Picture Association of America, Inc., filed a letter in opposition to the bill, arguing that such at-death transfer of digital media accounts violates federal copyright law (i.e., that each use or transfer of a digital media file from any device necessitates that new copies be created, copies that must be controlled by the copyright holder), characterizing the transfer of such a decedent's digital files at death as the personal representative's distribution of unauthorized copies of the subject digital media files.
While the current contractual licensing regime prevents the inheritability of such digital media files, the structure could change if courts determine that digital media should not be treated differently from traditional hard-copy media formats or if state legislatures enact new laws empowering digital media consumers to pass their digital media files at death, laws necessarily curtailing digital media providers from contractually mandating solely a license-based usage regime.