Who owns your digital downloads? (Hint: it's not you)

Someone better tell the folks who run the iTunes Store and its competitors. If you buy a digital music track or album from the iTunes store or one of its competitors, you don’t own it. Instead, you’re buying a license to play that track or album, and that license comes with an extremely limited set of rights.
Why does it matter? If you buy a CD in the United States, Section 109 of the Copyright Act gives you very specific rights under the first-sale doctrine. Fred von Lohmann of the Electronic Frontier Foundation explains those rights:

[O]nce you’ve acquired a lawfully-made CD or book or DVD, you can lend, sell, or give it away without having to get permission from the copyright owner. In simpler terms, “you bought it, you own it” (and because first sale also applies to gifts, “they gave it to you, you own it” is also true).

But the first-sale doctrine only applies to tangible goods, such as CDs. Digital music downloads (just like movies and TV shows and books) come with a completely different, much more limited set of rights. If you buy a digital album from an online service such as the iTunes store, Amazon MP3, or eMusic, you have no legal right to lend that album to a friend, as you could if you had purchased a CD. If you decide after a few listens that you hate the album, well, tough. You can’t resell it. You can’t even legally give it away.
Don’t believe me? Read the license agreement that you agree to every time you purchase digital music. If you’re like 99.9% of the world, you’ve clicked right past those agreements to get to the download. Here’s what you missed. I’ve used boldface type to highlight the most interesting parts.
The Terms and Conditions for the iTunes Store contains more than 14,000 words of dense legalese, including these bits:

Apple is the provider of the Service, which permits you to purchase or rent digital content (”Products”) for end user use only under the terms and conditions set forth in this Agreement.
[…]
You agree that the Service and certain Products include security technology that limits your use of Products and that, whether or not Products are limited by security technology, you shall use Products in compliance with the applicable usage rules established by Apple and its licensors (“Usage Rules”), and that any other use of the Products may constitute a copyright infringement. Any security technology is an inseparable part of the Products. Apple reserves the right to modify the Usage Rules at any time. You agree not to violate, circumvent, reverse-engineer, decompile, disassemble, or otherwise tamper with any of the security technology related to such Usage Rules for any reason—or to attempt or assist another person to do so. Usage Rules may be controlled and monitored by Apple for compliance purposes, and Apple reserves the right to enforce the Usage Rules without notice to you. You agree not to access the Service by any means other than through software that is provided by Apple for accessing the Service.

The “Usage Rules” heading contains six rules. Four of those rules apply to products protected by digital rights management technology, including music sold through the iTunes store before early 2009 and movies and TV shows sold at any time. Music tracks sold after March 2009 do not include Apple’s FairPlay DRM technology and are referred to as iTunes Plus Products. Rules (i) and (vi) apply to all digital music sold today in the iTunes Store:

(i) You shall be authorized to use Products only for personal, noncommercial use.
[…]
(vi) iTunes Plus Products do not contain security technology that limits your usage of such Products, and Usage Rules (ii) – (v) do not apply to iTunes Plus Products. You may copy, store, and burn iTunes Plus Products as reasonably necessary for personal, noncommercial use.

What about the competition? The Amazon MP3 store Terms of Use contain a mere 1330 words. The license terms make it abundantly clear who owns the product you’re purchasing:

2.1  Rights Granted. Upon your payment of our fees for Digital Content, we grant you a non-exclusive, non-transferable right to use the Digital Content for your personal, non-commercial, entertainment use, subject to and in accordance with the Terms of Use. You may copy, store, transfer and burn the Digital Content only for your personal, non-commercial, entertainment use, subject to and in accordance with the Terms of Use.
[…]
5. Reservation of Rights
Except for the rights explicitly granted to you in the Terms of Use, all right, title and interest in the Service, the Software and the Digital Content are reserved and retained by us, our Digital Content providers, and our licensors. You do not acquire any ownership rights in the Software or Digital Content as a result of downloading Software or Digital Content.

And finally, there’s the eMusic Subscription Agreement, which contains more than 8800 words, including this blunt statement:

5.2 By enrolling in the Service, you acknowledge and agree that you have no right to provide any files obtained through the Service to any other party or through any other means. You may only make copies of any file obtained through the Service for your own personal use.
[…]
5.6 eMusic derives its rights to use the media offered on the Service from artists, record labels, publishers and other third parties for fixed periods of time and, sometimes, for limited territories. As well, eMusic is sometimes required to pull certain media off the Service (or otherwise restrict access to such media) for legal or commercial reasons.
[…]
8.1 Only you may access the Service using your IDs, unless otherwise agreed to in writing by eMusic. The content available through the Service is the property of eMusic or its licensors and is protected by copyright and other intellectual property laws. Content received through the Service may be viewed, used and played for your personal, non-commercial use only. You agree not to reproduce, retransmit, distribute, disseminate, sell, broadcast, perform, make available to third parties or circulate the content received through the Service to anyone or to exploit any such content for commercial or noncommercial purposes without the express prior written consent of eMusic. You further agree not to make use of the Content in a manner that would infringe the copyright therein.

The moral of the story? If you really want to own your music, forget about downloading and buy a CD. You might even save some money compared to a digital download.