Promo Part II: Universal Music Fighting the Case

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Universal Music Group vowed Thursday to appeal a court decision that allows the resale of promotional CDs.

“We intend to file an appeal and we are confident that we will prevail,” a Universal Music representative told Digital Music News.  The summary judgment, issued Tuesday, ruled in favor of Troy Augusto, sued last year by the label for reselling a stock of “promotional use only” discs.

The decision in UMG v. Augusto hinged on the first sale doctrine, which grants the recipient of a gift or purchased item the right to resell that item in the open market.  The judge ruled that promotional CDs are essentially gifts, and therefore subject to the doctrine.  “Augusto’s actions are protected under the first sale doctrine,” opined US District judge S. James Otero.

Universal is aiming to prevent the dilution of its physical product pool, though digital distribution offers the ultimate dilution of scarcity.  Still, like most manufacturers, major labels would prefer a world without physical resale.  In a decidedly non-digital 1993, cowboy superstar Garth Brooks withheld shipments to retailers that were offering his albums used, though antitrust concerns and negative press eventually forced Capitol Records to supply the targeted outlets.