The 9th circuit gives and it takes away

Then Timothy Vernor lost a case before the same court that could change things in the opposite way.

At issue in the case of F.B.T. Productions vs. (among others) Universal Entertainment Group was the status and nature of the digital recordings you download online, from Web sites, from iTunes or as ringtones.

Meanwhile, the case of Vernor vs. Autodesk involved the legal status of digital media, whether it can ever be re-sold or whether it remains the property of the company which created it, subject always to its license and distribution terms.

F.B.T. won. Vernor lost.

Universal and its music publishing allies argued that downloads are recordings, like the LPs or CDs you used to buy. They won this point at trial. F.B.T. argued these are actually licenses to "masters," no different in fact from the recording masters previously used to make those old records and CDs.

The Court of Appeals for the Ninth Circuit said this is the case.

Vernor, meanwhile, argued that copies of AutoCAD he obtained, that had not been opened and thus subjected to a license, were his to re-sell. Autodesk argued their license still held, and since Vernor wasn't in their channel he was selling their property without consent.

The Court of Appeals for the Ninth Circuit ruled this was the case.

For musicians, the difference was between taking a royalty of 8-12% of the proceeds, or half a publisher's cut, which can be up to 70% of the gross.

David Kusek, who managesruns the online music school at the Berklee College of Music's online library and, as Digital Cowboys, acts as a consultant to music labels and major corporations, wrote that if F.B.T.'s point holds on appeal it will transform the industry:

If an artist can directly license their music to iTunes and keep approximately 70% of the proceeds from each transaction, then why should they be paid 8-12% for music that their label licenses to iTunes? Shouldn’t the money paid to the label at least be split 50/50? If this ruling stands up to appeal and becomes more broadly interpreted, artists and writers will benefit greatly, and deservedly.

UPDATE: Kusek's blog is www.futureofmusicbook.com. I usually have a link directly to a post like this. Let's all make it up to him by joining his RSS feed.

Needless to say music companies are going to the mattresses on this one. They want a re-hearing and insist there is no precedent here. Only there is.

The Vernor case goes the other way. All those GameStop stores, all those eBay ads offering used software, or PCs loaded with previously-licensed software, they're illegal.

This does not just apply to software. It also applies to music. Stores selling used CDs are just as much in violation of the music industry's terms as GameStop.

And what about libraries? The American Library Association filed a friend of the court brief in Vernor. The court was sympathetic, but said the only recourse was to Congress.

Think Congress will take it up? I don't either. Which means that, while the RIAA has to cut musicians in for more of the cash they bring in, they now have the right to raid your local library and blow all their digital media off the shelves.