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Copyright Quagmire: Amazon's Cloud Music Legal Dilemma

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In the retail legal quicksand that today's constantly evolving digital content rules are creating—remember California's Supreme Court saying this month that E-tailers can ask for Zip codes but physical stores can't?—Amazon (NASDAQ:AMZN) is now rediscovering that nothing is so complex and muddied that lawyers can't make it worse. The issue: downloadable content copyright and a delightful unintended consequence.

This issue first cropped up Wednesday (Feb. 20) over at CBS Marketwatch, courtesy of onetime StorefrontBacktalk contributor Erik Sherman. Based on agreements with key record labels, Amazon has allowed shoppers who have purchased music CDs from Amazon to download and otherwise listen to audio tracks on an Amazon cloud for free. The legal copyright for Amazon to do this—based on those agreements—is predicated on the shopper owning the physical CD.

But what happens when that customer no longer has possession of that CD, asks Marketwatch? What if it's been given away or sold or destroyed or lost or stolen? All of a sudden, the legal basis for that copyright permission has vanished.

This gets worse. In almost all instances, a retailer has no way of knowing the customer no longer has that CD. Is the trigger owning it or possessing it? (If the trigger is owning, then losing the CD or having it stolen wouldn't be an issue. Selling it would be an issue, and giving it away is annoyingly murky.)

That means a retailer selling digital goods might find its legal status changing without any warning.

This situation is also self-accelerating. The very fact that Amazon is encouraging people to download and otherwise listen to these audio files from the cloud is likely going to sharply increase the number of shoppers who opt to give away or sell their CDs.

Ahhhh, what a tangled Web we weave when shoppers use download to receive.