How Do Online Record Stores Exist Under the Copyright Act?

By Shane Wax

When I was a child, one of my favorite activities was sauntering around Tower Records or the music section of my local Borders or Barnes N’ Noble ­– rarely with any intention of buying anything in the moment, more than happy to find unclaimed headphones to sample record after record before being forced to leave by my mother or an employee, all while building my holiday wishlist.

Alas, the coming of the digital age, and with it, streaming and on-demand music services, has not been kind to the record stores of yore.  In the modern age of music consumption, there is a spectrum of listening sources –pure streaming services like Spotify, Pandora and YouTube; on-demand services like Amazon, iTunes and Tidal, which let you both stream and purchase digital tracks; and then online stores, from which you can purchase physical copies of CDs and records, and maybe digital copies, but with no streaming options.

Then there is, which is a fairly unique platform that enables artists to sell (or give away) music in digital and/or physical format, as well as sell other physical merchandise, but which also offers a limited capacity to stream music on demand.  However, in a recent NPR interview, Bandcamp’s CEO and co-founder Ethan Diamond stated “I don’t think of this as a streaming service. I consider us a record store and a music community.”[1]

This NPR article got me thinking: well, is Bandcamp a streaming service or an online record store?  Because it does have aspects of both and the answer to that question could make a huge difference under the Copyright Act – millions of dollars of a difference!  After all, every time a song is played via Spotify, Spotify pays streaming royalties to the copyright owner (albeit at meager rates), but Bandcamp never pays any royalties for music streamed through its website.  Which in turn got me thinking: does the Copyright Act as currently written even have a place for online record stores?

Let’s begin with Bandcamp. In one sense, Bandcamp is what it purports to be: an online record store.  A consumer can purchase digital, and often physical, copies of songs and albums, and in most cases, preview the music before making a purchase.  And just like in a Tower Records of yesteryear, you can sample the music without any intention of making a purchase.  Instead of putting on a pair of headphones, a consumer visits the artist-, album- or song-specific URL and simply streams the music embedded on that webpage.  And unlike streaming services like Tidal or Spotify – there’s no radio, playlist or shuffle function and the only way to listen to myriad artists together is if you purchase songs and add them to your music library.

But in many ways, it is a much more interactive and immersive experience.  First, while physical realities limit the number of records a physical store can offer and the number of headphones available to customers, the vastness and near-universal reach of the World Wide Web means there are infinite listening opportunities, which aren’t subject to a store’s daytime business hours.  In theory, a single consumer could play the same 4-minute track on repeat 2,500 times (or the same 40-minute album on repeat 250 times) within a single week…  and never have to pay for it!  (Oh to be a kid locked in a record store overnight.)

How can that be?  One possible answer lies in the list of statutory exemptions under the Copyright Act, specifically, Section 110(7), which contains what is known as the “Record Store Exemption,” and states:

[The] performance of a nondramatic musical work by a vending establishment open to the public at large without any direct or indirect admission charge, where the sole purpose of the performance is to promote the retail sale of copies or phonorecords of the work, or of the audiovisual or other devices utilized in such performance, and the performance is not transmitted beyond the place where the establishment is located and is within the immediate area where the sale is occurring [does not constitute copyright infringement.][2]

Let’s break this statutory exemption down into “elements” or subparts:

  • The performance of nondramatic musical work
  • By a vending establishment
  • Open to the public at large without any direct or indirect admission charge
  • Where the sole purpose . . . is to promote the retail sale . . . of the work; and
  • The performance is
    1. Not transmitted beyond the place where the establishment is located
    2. Within the immediate area where the sale is occurring.

When a consumer listens to a song on Bandcamp, that is a performance of a nondramatic musical work.  Bandcamp does not charge any access fees, and a song or album can only be “previewed” on the same webpage on which it can added to the consumers “cart” for purchase; once you leave that webpage for another, the music stops.  So Bandcamp is at least three-fifths of the way to qualifying as a record store.

While there may some philosophical debate over Bandcamp’s motives and whether the “sole purpose” of song previews on Bandcamp “is to promote retail sale of copies or phonorecords of the work,” there is a threshold question whether Bandcamp or any online record store even qualifies as a “vending establishment.”  This is because “establishment” is specifically defined under the Copyright Act:

An “establishment” is a store, shop, or any similar place of business open to the general public for the primary purpose of selling goods or services in which the majority of the gross square feet of space that is nonresidential is used for that purpose, and in which nondramatic musical works are performed publicly.[3]

The apparent requirement of “gross square feet of space that is nonresidential” suggests that, at least under the terms of the Copyright Act, an “establishment” has a “physical presence” requirement – that is, brick-and-mortar stores.

This conclusion is echoed in a 2009 decision in the Southern District of New York addressing AT&T’s “fair use” defense, which sought to compare its mobile phone ringtones to record store previews, while ASCAP (the would-be licensor) argued that the record store exemption was limited in applicability to brick-and-mortar stores. The Court “agree[d] with ASCAP that § 110(7) . . . was intended only for previews of music in physical record stores,” adding its observation that “music in a record store can be enjoyed only while the customer is in the store, music streamed over the internet can be accessed from practically anywhere in the world.”[4]

If Bandcamp doesn’t qualify for the record store exemption under the Copyright Act, does this mean that Bandcamp is infringing copyrights by not paying royalties?  Turns out: no, thanks to Bandcamp’s terms and conditions, which state that any artist who voluntarily uploads any content to its website gives Bandcamp a non-exclusive, royalty-free license to reproduce, display, perform, etc., that content – much like the license users give to Facebook and Instagram when they upload photographs for public display.

To be sure, Bandcamp has been going the extra mile since the global pandemic began – introducing “Bandcamp Friday” in March and continuing through the end of 2020, waiving its fees one day each month so 100% of all sales go to artists and labels.[5]

[1] Damon Krukowski, A Tale Of Two Ecosystems: On Bandcamp, Spotify And The Wide-Open Future, npr (Aug. 19, 2020), available at

[2] 17 U.S.C. § 110(7).

[3] 17 U.S.C. § 101.

[4] U.S. v. Ascap, 599 F. Supp. 2d 415, 433-34 (S.D.N.Y. 2009).

[5] Ethan Diamond, An Update on Bandcamp Fridays, Bandcamp (Sept. 4, 2020)