Substitutes for Purchasing or Licensing Work

A use that acts as a substitute for purchasing or licensing a work weighs heavily against fair use. This is because providing a substitute, through reproduction or other means, decreases demand for licensed copies, affecting the market of the original work. The following are two case examples; in the first, the use was determined to function as a substitute, and in the second, it was not.

Substitute for Purchasing or Licensing a Work
Capitol Records, LLC v. ReDigi Inc., No. 16-2321 (2d Cir. 2018)
ReDigi designed an online marketplace for people to resell digital music files purchased from iTunes. ReDigi’s system made copies of digital music files owned by record labels. ReDigi then sold those copies to secondary buyers at a lower price than iTunes.ReDigi’s copies were sold to the same consumers who otherwise would have bought the music from the label, thus decreasing the demand for the label’s original files, and acting as a direct substitute for the original work.

Not a Substitute for Purchasing or Licensing a Work
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984)
Sony sold home videotape recorders, which viewers used to record television broadcasts in order to watch them later, a practice known as "time-shifting." The television broadcasts were already free to the public, and time-shifting in the home was intended for private, noncommercial use. Thus, under these circumstances, the Court found that making copies for time-shifting constitutes fair use. Notably, these recordings do not decrease market demand for television broadcasts, nor do they act as a direct market substitute.