Do You Think That You Own Your Digital Content? Think Again
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Do You Think That You Own Your Digital Content? Think Again

A new study has revealed fundamental misconceptions among consumers regarding ownership rights

September 29, 2016

More and more content is going digital these days—music, books, games, and more. Digitalization has changed more than the format in which consumers get their content: it has changed their rights to own that content, and most of them have no idea.

"A significant number of consumers are being deceived"

Ownership rights seemed simple in the age of physical media: if a person purchased or was given an item, that person owned that item. While conventional wisdom may hold that the same principle applies to digital media, licensing terms for this type of content are actually much more restrictive. And as a recent study conducted by University of Berkeley Law alumnus Aaron Perzanowski and Berkeley Center for Law and Technology Faculty Director Chris Hoofnagle revealed, most consumers are not aware that they do not actually own much of their digital content.

"Some in the tech industry suggest consumers don't value those rights because buying digital content conveys an acceptance of more limited rights," Perzanowski said. "We were skeptical of that explanation because it assumes that consumers have a nuanced understanding of licensing terms. Because those licenses are often thousands of words long, it should come as no surprise that consumers don't read them. At the same time, marketing language like 'buy now' and 'own' sends the conflicting signal of familiar property rights."

The two designed the first-ever empirical study of how consumers perceive and understand the marketing language that digital media retailers use.

"We wanted to test how well people understand their rights when they click 'buy now' to acquire digital media," Perzanowski said. "Sure enough, our study reveals that a significant number of consumers are being deceived by such transactions."

Testing Perceptions

To test these perceptions, they made a fake online retail site simulating a popular commerce platform like that used by such online retailers as Amazon and Target. The site surveyed a sample of almost 1,300 online consumers across the U.S. Then, the researchers analyzed the consumers' perceptions through the lenses of false advertising and unfair and deceptive trade practices.

The study was conducted as follows: first, consumers would choose an item on the fictitious site. Then they would be shown one out of four variations on product pages. Three of these pages displayed digital goods with different transaction labels, including "Buy Now," "License Now," and a brief notice that listed acceptable and unacceptable uses of the item. The fourth variation on the page showed a physical good and the usual "Buy Now" button. Then consumers were told to review the page in the same way they usually would when purchasing media content online.

There were 970 participants who looked at digital product pages. Out of these, 14 clicked the "Terms of Use" link.

"Aaron came up with this innovative idea that I've never seen in advertising copy testing," Hoofnagle said. "It was a great way to get survey respondents involved in the process."

The results indicated that a significant number of consumers—often a majority—believe that they have the same rights to use digital media and content as they do with physical, tangible goods. The study also shows that consumers care about these ownership rights. Consumers' responses showed that they would not mind paying more for such rights and, if they cannot have these rights, they are more likely to get the media somewhere else, either legally or illegally.

Digital retailers do stipulate in contracts with consumers that the latter cannot sell, rent, lease, distribute, modify, or otherwise assign the rights to the digital content. Apple's iTunes Store goes so far as to state that Apple may "change, suspend, remove or disable access to any iTunes products…at anytime without notice." And in 2009, Amazon electronically erased two books by George Orwell from the Kindle e-readers of those who had purchased it due to a copyright dispute. It provided affected consumers with refunds.

The law clearly protects the continued ownership rights held by digital retailers over the content they sell. This study shows, however, that consumers are unaware of this because the rights are nearly hidden in contractual legalese instead of being communicated plainly to those who purchase the content.

A Potential Solution

Hoofnagle and Perzanowski have come up with an easy way that retailers can clear up these misconceptions: add a short notice to digital product pages that summarizes consumers' rights in plain, everyday language.

"We expect that the evidence we present will create an incentive for retailers to respond, especially since we've outlined an effective and low-cost way to address this issue," Perzanowski said. "That pressure is likely to grow as public awareness increases and the risk of litigation or public enforcement becomes apparent."

The two have a Plan B if the retailers do not respond to the pressure: take the issue to the Federal Trade Commission (FTC). In fact, they have already met once with several Commission lawyers responsible for conducting investigations concerning sellers of digital media.

Hundreds of billions of dollars are generated each year in revenue from digital product sales. The study shows that, if consumers really did understand the limited rights they acquire when they purchase digital content, then the market could experience lowered prices or even new business models offering expanded rights.

"Given its limited resources and the wide swath of the economy it's responsible for regulating, the FTC likely wants to focus on the biggest deceptions facing consumers," said Hoofnagle, who authored a recent monograph on the agency. "We think our study goes a long way to establishing a collective multi-billion dollar injury to consumers."