Reselling Promo Discs?

A promo CD barcode with hole punched through itI’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.

Not anymoreThe 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 Bluegrass Today 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 ‚Äì keeping the Promo CDs ‚Äì 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.

  • The judge is right. All of this reserving of property rights has been nothing but a silly ruse.

    Now the “promotional purpose” of the promotion CD being sent out is highly contingent. Not every review copy sent out gets written about, and not every airplay copy sent to a radio station passes muster.

    In a great many cases, artists are seeing very little of the money from CD sales in any case: it’s mostly going to the labels. The same labels that built the CD business on a very high price point ($15+) and are now watching the whole thing crash about their ears.

    The (pre Internet) gray market in CDs is a child of the rapacious nature of the supposedly legitimate side to the business.

    Independent artists should know that sending promos is a speculative activity. They may or may not get traction, and if they don’t, they’ll probably end up in the cut-out bin somewhere.

    Does this mean a loss of a sale? Probably not, because the vast majority of cut-out sales are speculative buys–people are willing to take a chance on your CD at $6. Less so at 12 or 15. So if your cover looks good and maybe they heard a tune of yours on the radio, they’ll give it a try. In all likelihood you wouldn’t have had a sale there except at a discount.

    But if your disc is good, the buyer may want more. The chances of coming across another of your discs in the cut-out bin are slim, so you may get a full-price purchase out of it.

    Of course, the Internet makes all this a lot more complicated.

  • rlmoretz

    I personally treasure every copy I receive for airplay on my show, which I have been doing for over eleven years now. I do not agree with the fact these are the same as being sold, this is my opinion is lost revenue for label and artist and everyone else involved. We have also promoted several festivals and music events, and we have never taken a percentage of sales from the artist!!! I have also over the years have folks calling me or seeing me and saying, can I borrow that and get a copy, and I have always said, no but I can tell you where to purchase it. As I said at first I treasure that the labels and artist trust me to send out the copy in the first place to promote and play, and it is not because it is free, because the vast majority of the artist we support by hiring them for shows or going to see them perform elsewhere, or by buying the cd from independent labels that may not have me on their list. Anyway that is the way I feel. Ronnie Moretz, Lost Ridge Productions LLC Boone NC

  • AM1080WKGX

    Being a DJ myself and only having been on the air for just over one year I can agree with Ronnie Moretz, I too have all the CD’s that have been sent to the station and I too tell the listener where to buy the CD. But yet do the festival promoters come to us an pay us for promoting the show, do the artists come up to us and give us money for helping them sell the CD’s. No to both of those, but not all DJ’s are out to make the extra money nor are we out to hurt the industry, we are trying to help the artists a promoters, please don’t blame or punish all the DJ’s because some of the DJ’s or promoters do the wrong thing. KT, AM 1080 WKGX

  • While in Nashville recently and rambling in a music store, I came across a copy of the new Dailey & Vincent “pre-release” CD for sale. I was appalled..!! In this very same store, there were several copies of “Primecuts of Bluegrass” for sale.

    I for one treasure all the material we receive for broadcast at BluegrassRadio.org. I hold these CD’s very close and will NOT share any of them. I have actually have turned down other broadcasters who want copies of these CD’s. I simply refer them to the providers. If the record companies are going to provide me their product, I owe it to them to protect their property. Anyone who violates that trust should be prosecuted.

    Clyde Scott – BluegrassRadio.org

  • mitch_cumstien

    What’s a CD?