Impact of new consumer laws on the music business

07 December 2015

Mary Pritchard

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What do music downloads have in common with fridges? Not much on the face of it but the new Consumer Rights Act that came into force on 1 October 2015, creates a new category of product - digital content - and applies similar consumer protections to digital content as apply to physical goods.

Music, films, games and books which are streamed or downloaded are all now clearly covered by the CRA – and the music industry needs to be alive to the impact of consumer rights on downloaded and streamed content to avoid being stung by disgruntled consumers.

Consumer rights legislation has long been due a makeover. Despite digital music revenue now exceeding physical sales according to the 2014 IFPI Digital Music Report, until now consumers only had rights in relation to defective physical products. The CRA changes that, but only for paid digital content; the same protections don’t apply to free downloads (although if a free download carries a virus the provider may still be liable for damage caused to the consumer's device or other digital content by that virus.)

Here are some of the key issues.

The consumer has the right to a repair or replacement where a download is faulty 

If a consumer downloads a song and it’s not of satisfactory quality, not fit for purpose, or not as described, there are various options that the online trader must offer to the consumer, including a repair or replacement where a download is faulty. Consumers who download defective content don't have an automatic right to a full refund.

If the repair or replacement isn't carried out quickly enough and without significant inconvenience to the customer, or if that's impossible, then the customer has the right to a price reduction, which could be the full amount of the price.

Although clearly the company providing the download shouldn't be held responsible for failure in the user's fibre-optic broadband, in reality it may be difficult to get to the bottom of whether a downloaded track doesn't play because the content is faulty or because the customer's device isn't working. It will be interesting to see if digital content providers can be bothered to argue for the sake of a 99p download.

The dreaded terms and conditions

Now it is clear that digital content is covered by the legislation,  providers of digital downloads will need to make sure they get their customer facing teams in place to respond to customer complaints and queries in good time, but also get their terms right.

Transparency is the buzz word. Anything that isn’t clear or is unfair runs the risk of being unenforceable.

Providers of digital content will also need to provide consumers with the pre-sale information required by the CRA: primarily information about itself, the main characteristics of the digital content and the performance of the contract.  This information will form part of the contract between the trader and the customer, so if a trader gives incorrect information to a consumer about a digital product as part of the sales process the consumer will have remedies available to it.

It's worth mentioning here that since June 2014, customers have had 14 days to change their minds about purchasing digital content and to obtain a refund (known as the "cooling-off period"). Digital content providers can't supply digital content to consumers in this cooling-off period without the consumer's express consent.

Traders who want to prevent consumers from downloading and making copies of music, before then "changing their mind" may want to revisit their terms and conditions to make sure they have the right wording included and require the customer to actively tick a box to show they agree to this – pre-ticked boxes will not be enough.

As with all business, it’s about reputation

The CRA was intended to make it easier for consumers to know what they are entitled to and businesses to know what they have to do. It's set out more like a set of FAQs than a statute, so should be easier for the rights-savvy consumer to navigate.

Enforcement bodies such as Trading Standards Services can seek a court order against businesses which fail to comply with the CRA and other consumer legislation.

It remains to be seen to what extent the average downloader can be bothered to complain, but as with all business, it’s about reputation. User generated reviews can have a major impact on revenues so it's important for online retailers to get it right from the outset.