How to Legally Sell CDs

Selling compact discs has gotten trickier than ever. In an age where recorded sound increasingly finds expression through nontraditional means--such as cell phones and online stores--more responsibility than ever before falls on the people looking to profit from selling music. Whether you sell CDs on the street or take the online auction route, you're still held accountable for any breaches of copyright. Knowing the basics is the key to heading off problems.

Know what you're selling. Outright bootlegs--with their hand-printed or blurry, photocopied sleeves--are simple to spot. However, watch for pirated copies of legitimate or promotional CDs, which record labels give away to build audiences for new releases. Check the bottom of the disc first. If you see a pale green or non-silver-reflective surface, you're probably dealing with a home-recorded copy.

Don't stop your inspection with the bottom of a disc. As noted in the eBay seller's guide "How To Spot Fake CDs," technology now allows the direct imprinting of homemade labels right onto a CD. However, one other clue will help. Check for the imprinting of a catalog number on the inner ring. If the number is missing or doesn't match the item you want, then it's likely pirated.

If you use an online system to sell music, file a report against the person who tried to unload their pirate CD copy. Failure to complain may lead to other buyers getting scammed, and hurt confidence in how a particular online service operates. Be succinct and specific about the facts so other buyers can weigh the risks of doing business with a particular seller.

Review all applicable laws, such as the Digital Millennium Copyright Act, which is the most far-reaching intellectual property legislation. While the "first sale" doctrine protects the selling of previously owned or promotional CDs, that doesn't extend to home-recorded compilations of various songs, for which you must normally show some form of copyright ownership.

Review legal quirks that may affect your business. A federal court decision in the fall of 2008 upheld the right to sell promotional CDs through the first-sale doctrine, which allows owners to dispose of their copies, within certain guidelines. Many states have responded by adopting detailed laws of their own. In Florida, for example, new retailers must apply for permits and post a $10,000 bond, according to www.boingboing.net.

Double-check with your local consumer affairs department before you become a street vendor. Every municipality is different--for example, New York doesn't require specific licensing for so-called "First Amendment" items, such as books, newspapers, CDs and artwork. However, a tax stamp is required, and the locations are strictly regulated. Failure to heed these laws may result in arrest and confiscation of your merchandise.

Join local merchants associations, vendors groups or chambers of commerce in your area. This does two things. First, you'll get to interact with other people like yourself and swap tips and ideas. You also gain access to resources that fall beyond your pocketbook, such as procedures for reining in rogue vendors or stores that persist in CD piracy.