Quality Responsibility for Online Digital Music Distributors
Today, the transactions of music has significantly changed in the way that the transaction objects have e become more intangible as they are no longer transacted along with a physical carrier such as a record. Moreover they are transacted over the internet. The consumer protection acts were not designed with these new ways of transacting music in mind. This implies that the transactions of intangible goods such as digital music through the internet may be treated differently than what is the case if the music would be packaged more tangible and then transacted upon. For consumers this may imply less protection from receiving defaulted goods which is one of the fundamental protected rights in all purchase laws. For business actors this uncertainty implies that it is difficult to make a risk assessment on what rules one has to follow when creating consumer agreements and to what extent consumers will complain or leave the business if one is using doubtful contractual stipulations. Such uncertainty may lead to higher transaction costs than what otherwise would have been the case. The focus of this thesis is to investigate quality responsibility within the field of digital music. This has been done through investigation of legal acts, case law and studying both legal and other kinds of literature. In order to illustrate the current situation, a brief case study have been conducted through investigating the actors, Spotify, Last.fm and iTunes Store which all provide different kinds of digital music solutions over the internet. They have also all in some way defined what kind of defaults a consumer may claim through their end-user agreements. Finally, the legislative conclusions have been put in relation to the norms of the public arena and the consumer collective in order to assess whether business actors may risk other claims than merely civil right ones when using certain kinds of contractual stipulations. The reason for this more than risk assessment is to assess whether a potential legal movement may suggest legal changes to existing laws, in the near future. The result of this study shows that the Consumer Sale of Goods Act shall be applied to the transactions relevant here. It further shows that two out of three actors use quality disclaimers that might be doubtful in relation to the laws regulating physical goods. However, as this field is still emerging and that no clear case law exists, it is difficult to state exactly how these disclaimers would be judged in court. Even if three out of two actors use these kinds of disclaimers, it shall be noted that the third and biggest actor, iTunes, does take on responsibility for the quality of its goods. Furthermore, social movements are assessed to exist in the field of digital music. Currently, these are mostly focused towards legalizing free downloading of copyrighted music but may have potential to steer towards the feasibility of contractual stipulations of being forced to adhere to the current legislation and use the legal alternatives. This could imply risks for business actors using non-consumer friendly agreements as consumer protests may risk hurting their brands with a potential of general loss in consumers as a following consequence to this. The conclusions in relations to this is first that there are existing laws that may be applied to these kinds of goods due to the similarity in transaction objects and the protection needs of consumers. Second, the warranty disclaimers have the potential to be disclaimed through the contract act. Third, a more consumer friendly business norm may be emerging with reference to the fact that iTunes today take on quality responsibility. Fourth, the consumer agency is strong internationally and may take actions within this field. Finally, there is a risk that the consumers otherwise organize into social movements to change this due to consumer dynamics in this field.
MSc in Intellectual Capital Management