Canadian CD Compiler Busted by CRIA

In June, while the Recording Industry Association of America was collecting fat settlements from unauthorized CD compilers, its Canadian counterpart was busy shutting down Purple Dot, a custom-disc operation in Calgary, Alberta. The Canadian Recording Industry Association e-mailed a cease-and-desist order to 18-year-old Robert Clark, owner and operator of Purple Dot, which had been advertising on the Internet in the Yahoo! directory.

Unlike and, custom-disc compilers that are authorized by several small independent labels to resell their property, Purple Dot was offering titles by big-name mainstream artists---without purchasing licenses or arranging to pay royalties. Clark was temporarily able to sidestep the copyright issue by claiming to be a "duplication service" for people who already owned the music on CD and simply wanted specific tracks from several different discs transferred to one.

In a "fair use" exemption, Canadian law allows consumers to transfer recordings they legally own from one format to another. For personal use, CDs may be dubbed onto cassette tape, DAT, CD-R, or MiniDisc without fear of breaking the law. Clark figured he could bypass the necessity of having customers send in their own discs by simply having them state that they already owned the music. As he saw it, he was giving them something they'd already paid for, and therefore wasn't stealing from the record companies. He presented this line of reasoning to some attorneys in Calgary before launching his website last November, and they told him it might fly. "Purple Dot does not sell music," Clark stated on his website. "We can only trust that you have the original CD that each track appears on."

The Canadian Recording Industry Association thought differently. The CRIA's general counsel, G. Ken Thompson, said, "If you make a copy yourself, it falls within the exemption. If someone else makes it for you as a commercial venture, it definitely doesn't . . . You can't go into business selling other people's intellectual properties." Clark said he would like to challenge the cease-and-desist order in court, but can't afford the legal costs. Before the CRIA got after him, only Sony Music had contacted him about the possible legal consequences of his business.

The reluctance of big record labels to license their products to compilers continues as high-quality digital duplicating equipment becomes more widely available at declining prices. Purple Dot sold about 150 custom discs at $13 US before Clark shut it down at the end of June. Most of his inquiries and customers were in the US, he said, adding that the response was "huge" when customers saw that they could get major artists from major labels on custom CDs. "People saw that they could get popular artists and the orders came pouring in," Clark recalled. "It was incredible."