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States seek levies on digital-media downloads
By Declan McCullagh and Anne Broache
Staff Writers, CNET News.com
April 13, 2006 4:00 AM PDT
Internet shoppers accustomed to tax-free purchases from Apple Computer's iTunes Music Store soon may be in for an unpleasant surprise.
State legislatures and tax officials, eager to find new ways to boost government spending and curb budget shortfalls, are eyeing the burgeoning market for digital downloads as a potentially lucrative source of revenue.
A CNET News.com analysis shows that 15 states and the District of Columbia now tax downloads of music, movies and electronic books. Some high-tax states such as California do not levy the same charge on iTunes downloads, but that could soon change.
"More states are beginning to tax downloaded products," said Steve Krantz of the Council on State Taxation, which represents companies that do business in many states. "Some are doing it through specific legislation. Others are doing it through the interpretation of previous law."
Does my state tax digital downloads?
While most states still only tax "tangible" online purchases, others are making exceptions for digital downloads, according to CNET News.com research.
Alabama
State statute/proposalAlaska
Alaska has no sales tax
Arizona
Arkansas
California
"Sales tax applies to tangible personal property--things you can hold, touch, feel, see--and downloaded music is not considered to be tangible personal property."
- Anita Gore, spokeswoman, State Board of Equalization
State statute/proposal (pdf)Colorado
Connecticut
Delaware
Delaware has no sales tax
Florida
"Sales tax is not due because sales tax generally applies to the sale of tangible things, and when music or other content is downloaded, nothing tangible is generally received. Thus, no sales tax is due. However, note that if the same content were sold on a disc or in some other tangible form, it would be subject to sales tax, as there would now be tangible personal property that the tax would apply to."
- Renee Watters, chief of public information, Department of Revenue
State statute/proposalGeorgia
"We don't impose sales and use tax on digital goods."
- Charles Willey, spokesman, Department of Revenue
State statute/proposalHawaii
Illinois
"If you download Microsoft Word, it's taxable...if you download "Walk the Line" by Johnny Cash, we don't consider that software (or taxable)."
- Mike Klemens, spokesman, Illinois Department of Revenue
State statute/proposalIndiana
"Digital goods purchased via the Internet are treated the same as software purchases, and therefore, they are subject to sales tax."
- Stephanie McFarland, spokeswoman, Indiana Department of Revenue
State statute/proposal (pdf)Iowa
Kansas
Kentucky
"We tax digital downloads of computer software and music as tangible personal property."
- Jill Midkiff, spokeswoman, Kentucky Department of Revenue
State statute/proposal (pdf)Louisiana
State statute/proposal (pdf)Maine
State statute/proposalMaryland
State statute/proposalMassachusetts
"We do not tax downloads of digital goods; we consider it information, and we don't tax information."
- Tim Connelly, spokesman, Massachusetts Department of Revenue
State statute/proposalMichigan
"We do not have a sales tax on an actual digital download. If you were to, say, purchase something that was prewritten computer software that was, in essence, delivered electronically, then we would, but not on something from, say, iTunes."
- Caleb Buhs, spokesman, Department of Treasury
State statute/proposalMinnesota
Mississippi
State statute/proposalMissouri
State statute/proposalMontana
Montana has no sales tax
Nebraska
Nevada
New Hampshire
New Hampshire has no sales tax
New Jersey
"(Digital downloads) are not (taxed) at the moment, but there is a pending proposal."
- Tom Vincz, spokesman, New Jersey Department of Treasury
State statute/proposal (pdf)New Mexico
New York
"(Downloads of) music, movies, pictures, graphic files, that type of stuff is not taxable."
- Michael Bucci, spokesman, New York State Department of Taxation and Finance
State statute/proposalNorth Carolina
"There is no tax like that (on digital downloads) here?I can't say there won't be on in the future, but for now, there is not one."
- Kimberley Brooks, spokeswoman, North Carolina Department of Revenue
State statute/proposal (pdf)North Dakota
State statute/proposal (pdf)Ohio
"We do not (tax downloads of music, etc.). Software, we do tax, if it's electronic transfers of prewritten computer software."
- Gary Gudmundson, spokesman, Ohio Department of Treasury
State statute/proposalOklahoma
Oregon
Oregon has no sales tax
Pennsylvania
"If you buy music on a CD, the CD is tangible personal property; it's subject to tax. If you download it, our interpretation was it's not taxable because it's not tangible."
- Steve Kniley, spokesman, Pennsylvania Department of Revenue
State statute/proposalRhode Island
State statute/proposalSouth Carolina
"Unlike computer software delivered in the form of a computer diskette or magnetic tape, computer software sold and delivered by electronic means cannot be seen, weighed, measured, felt, touched or is not otherwise perceptible to the senses."
- Ruling, South Carolina Department of Revenue
State statute/proposalSouth Dakota
Tennessee
Texas
"Except as otherwise provided by this chapter, the sale or use of a taxable item in electronic form instead of on physical media does not alter the item's tax status."
- Texas tax code
State statute/proposalUtah
"The sale, rental or lease of prewritten computer software constitutes a sale of tangible personal property and is subject to the sales or use tax, regardless of the form in which the software is purchased or transferred."
- Utah state code
State statute/proposalVermont
State statute/proposalVirginia
"(Digital downloading) is not a taxable transaction and has never specifically come up as proposed legislation to tax digital downloads."
- Joel Davison, spokesman, Virginia Department of Taxation
State statute/proposalWashington
"We have to determine whether the seller has nexus in Washington, but if we get by that point, then sales of song files, and prewritten software files, are subject to sales tax here."
- Gary Davis, tax information and education manager, Washington State Department of Revenue
State statute/proposalWest Virginia
State statute/proposal (doc)Wisconsin
State statute/proposalWyoming
State statute/proposalWashington, D.C.
This means that more Americans will be obligated to pay more every April 15 because of a concept known as the use tax. If your home state taxes digital downloads, those levies are generally collected either when purchases are made or on tax day, depending on the location of the Internet retailer.
One reason that music and movie downloads have largely escaped the notice of tax collectors is that, until recently, the market was relatively small. But the dizzying success of iTunes and such rivals as Yahoo Music Unlimited and eMusic.com has exposed a rich vein of untapped revenue. Hollywood studios raised the stakes even higher this month by announcing plans to sell movies over the Internet that buyers can keep.
Digital sales of music tripled from 2004 to 2005, leaping from $400 million to $1.1 billion worldwide, according to the International Federation of the Phonographic Industry, a trade association known as IFPI. The U.S. recording industry estimates that domestic sales totaled $503 million last year, but that figure doesn't include movies, e-books, online video games and other forms of digital media.
That remarkable growth has prompted states like Kentucky to revisit their laws and impose new taxes on media downloads. "Music is included because music downloads fit the definition of personal property," said Jill Midkiff, a spokeswoman for the Kentucky Department of Revenue.
"(Taxing downloads is) antiproductive and anticonsumer, and hurts the business.
This would be a huge blow against iTunes and the studios that are finally
realizing they have to sell their movies online." Ludwig von Mises Institute
Similar proposals are on the horizon, with Internet companies tracking tax expansion efforts in New Jersey, Vermont and Rhode Island. New Jersey Gov. Jon Corzine, a Democrat, proposed in his budget (click here for PDF) that "downloaded music and videos" be taxed starting Oct. 1. The state tax agency expects legislation to be introduced in June.
Of the 15 most populous states that, together, represent more than half of the U.S. population, three--Texas, Indiana and Washington state--tax media downloads, according to a News.com survey. In addition to the nation's capital, the lesser-populated states that impose such taxes are Alabama, Arizona, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maine, New Mexico, South Dakota, Utah and West Virginia, according to an industry lawyer.
These states typically say taxing digital-media downloads is a matter of treating physical shopping and online purchases the same. Buying a CD at Tower Records is taxed, the argument goes, so why should a stream of bits from iTunes or Walmart.com be tax-free?
Taxpayer advocates don't accept that premise, saying it represents an unfair addition of tax laws. "It's antiproductive and anticonsumer, and hurts the business," said Llewellyn Rockwell Jr., founder and president of the Ludwig von Mises Institute, a free-market think tank in Auburn, Ala. "This would be a huge blow against iTunes and the studios that are finally realizing they have to sell their movies online."
Music defined as software
Tax collectors in some states where the law does not explicitly permit taxes for downloaded media have invented ways to expand the tax base, anyway.
"Should administrators (interpret tax laws) in the dark? If changes are made in
the legislature, we can duke it out as a tax increase." NetChoice
In Kentucky and Washington, state law does allow the taxation of computer software. Washington law defines software as "a set of coded instructions designed to cause a computer...to perform a task," which tax officials have interpreted to include music, movies and e-books.
"We use that same rationale on other types of files, such as music files or video files," said Gary Davis, the state's tax information and education manager. "We view them as similar because they cause some action by a piece of hardware to play them."
Davis recited aloud the definition of computer software from Washington's tax law and said he believed that data files, like an executable program, cause a computer to "perform a task." He said, "I think it's our policy that that's exactly what a music file does in order to hear it."
That definitional elasticity has alarmed online retailers, which say states are interpreting tax laws in ways never envisioned by elected officials or the general public. They would rather see the issue decided openly in state legislatures than behind closed doors by tax agencies.
"Should administrators do it in the dark? If changes are made in the legislature, we can duke it out as a tax increase," said Steve DelBianco, executive director of the NetChoice coalition, which counts eBay, Oracle, Orbitz, VeriSign and Yahoo as members. "The legislatures have to do it in the daylight."
Next page: A 1992 court ruling's lasting impact 
Online purchases from sites like Amazon.com or eMusic may seem to arrive tax-free. Strictly speaking, however, shoppers are required to pay their own state's sales tax rate--the concept is called a use tax--and voluntarily report the amount owed on tax day. Few do, a situation that state tax collectors are hoping to change.
In states like California that currently don't tax digital downloads, online shoppers don't have to worry about calculating use taxes. But if more states follow the lead of Texas and Washington state, which now tax online-media purchases, the reach of such taxes will steadily grow.
How does this affect your tax returns?
Hear Declan McCullagh, News.com political correspondent, on today's podcast explaining the ins and outs of taxes for your online purchases.
States push to tax Net shopping
Apple seeks tax haven in Nevada
Jobs uses his Apple shares to pay taxes
Senators propose taxing Internet shopping
Apple steps up iPod 'tax' push
Renewing the push to collect Net taxes
Internet taxes? It's just a matter of time
States yearn to collect online sales taxes
'iPod tax' planned for music downloads?
Canadians get iTunes on the cheap
States won't write off taxes on Web sales
States push for piece of online sales
Unexpected twists in Internet law
Debating digital media's future
Sales taxes coming to a site near you
States to vote on Internet taxes
U.S. officials knock EU tax proposal
Commentary: Internet taxes are coming
Digital commerce sparks tax tango
California lawmakers OK Net sales tax bill
Net firms concede need for taxes
Taxes can get complicated for online entrepreneurs
Apple's iTunes leads soaring digital-music sales
State losing millions in Net transactions
eBay sellers face tough tax questions
Thumbs down on an Internet sales tax
States move forward on Internet sales tax
Bush signs Internet tax moratorium
New reports urge states to simplify taxes on e-commerce
Are you reporting your Internet purchases?
Congress tackles taxing issues
Apple may offshore iTunes to duck taxes
Techies to wait longer for green card
Editors: Mike Yamamoto, Zoë Barton
Design: Michelle White
Production: Daniel Judd, Andy Lottmann
Download the full report in PDF format.
Not to mention, if you believe the BS from the RIAA, we don't own music, movies, or e-books, we're only renting the information. So if you're going to tax it like a movie rental, ok, fine. But it's not a purchase in that case.
If they're going to impose a tax, fine, push it through the state legislature, but don't just have some fool in an ivory tower making decisions that affect thousands of other people.
Each new copy sold represents a new virtual property and new tax obligation. How's that for a turn around on their contention that virtual music is a tangible property and "theft" of such should be punished under standard theft laws?!
Perhaps the RIAA will decide I do own the music I purchased afterall, in which case they'd better get their hands off my property and stop telling me how and where I can use it and whom I can and can't sell it to.
taxes are added to your lease payments)
2. You're relying on RIAA being rational. Of course, they have
never shown to do anything rational yet, so I'm not sure why you
think that they will decide: "Our bad".
We have become nothing more than a source of revenue to our
Gov't. There is no good that comes from this at all.
You won't see improved education, you won't see better traffic
infrastructure, you basically won't see anything of value come of
it. But perhaps the legislatures will be able to give themselves a
bigger raise this year!
Now if we could go to a flat tax system we would save a lot of troubles, keep more of our money and save government money in the process. The problem here is that governments are looking at how to INCREASE spending. This is the part that should set off alarm bells, now what they are taxing in order to INCREASE their spending.
Now, states - the primary sales tax collectors - have been long pointing to "lost revenue" in it's maintance activities, as a result of more and more people moving towards internet purchasing as opposed to traditional 'bricks and mortar' stores (like Sears). And while that's undoubtably true, that argument on its own fails to mention the cost saving benefits (from a maintanence standpoint) that comes from a more efficient delivery mechanism (i.e. the internet). Much less physical infrastructure is used in the first place. Police and fire companies are used much less, if at all, and really only at the location the goods are stored. It's also worth noting that very few thefts and accidents occur during transit from supplier to purchaser, and those that are reasonable to expect are monitored by the delivery authority - UPS/FedEx/etc - NOT a state or municipal authority. In other words, whereas the states are losing revenue, they are also incurring less costs. It may or may not be a one-to-one ratio (i.e. every dollar of tax revenue lost equals a dollar saved in less government sevrice costs), but the effect is real nonetheless. And yet I've never heard of any state offering to impose an internet sales tax that is less than the regular sales tax. In effect, once internet sales taxes become as ubiquitous as regular sales taxes, states will be enjoying a windfall. I predict higher gross state sales tax revenues will become the norm very soon, much to everyone's 'surprise'.
Anyway, if you accept the above as being a valid point, then just think of how low a states infrastructure costs are on downloads of SOFTWARE. There is NO physical good traversing the roads, NO theft or accident protection costs incurred, there isn't even an impact on the environment (from fuel use in transportaion primarily) that wouldn't otherwise be occuring if you were using your computer normally anyway (like electricity generation). Indeed, such traditional costs are IMPOSSIBLE to incurr with downloads, because physical costs by definition can only happen in the physicial world, and an download of any type is purely digital in nature. Lastly - and perhaps most important - the infrastructure that is used to facilitate internet downloads (phone lines, coax cable, what have you) is ALREADY taxed for maintenance purposes, at both the federal and state levels. There are so many arcane taxes & fees tacked on to the average phone bill that most people have no idea what they're even for anymore.
So to sum it up, the concept of taxation on iTunes downloads (or any software at all) is a complete and total racket. They would be taxing something that leaves almost no additional footprint in the physical world, thus requiring NO additional governent effort (and taxes) than already exist in order to facilitate it. There should be no download sales tax - ever.
And if we want to be intellectually honest about the situation, any sales tax imposed for buying even physical goods over the internet should be much, much less than the sales tax imposed on traditonal commerce as well. Anything else amounts to free money - otherwise knnown as a tax increase - for the government. How ironic that the Republicans seem to be just as willing to impose it as Dems, eh?
Apologies.
Everything I buy and use is taxed. Even food. What in the world is going on?
Where does all the billions collected go??? Infrastructure and maintenance goes according to the home value in the neighborhood.
This is sickening. The worst part is that no one is willing to say "enough is enough." No one is willing to ask, "where and how are you spending MY MONEY"???? I'm not implying that we shouldn't contribute to the maintenance of our country. But damn it, stop the overzelous taxing on everything in life. And, stio wasting MY MONEY on stupid politically driven projects.
It's the greed that drives them, and the "we're in charge and no one can stop us" attitude that goes on around the country that sickens me.
Like they say "if moves; tax it. If it doesn't move; tax it until it moves."
The worst part is that no one will stop them from doing it.
Sales tax is charged by the retailer on the purchase of these cards.
Then, when music selections are made in the iTunes Music Store,
Apple deducts sales tax again (Texas).
Apple allows parents to buy "allowances" for their family members.
I'm all against this whole continued abuse of taxation. But, if you want to avoid the double-dipping by these greedy politicians, then do not buy the cards at the retail stores. Buy directly from the iTunes store and you'd be set.
Hope it helps.
It's a downward spiral, we really need taxation reform. I can't see how anyone is going to get ahead anymore. Wages don't increase anywhere close to the amount of taxes or goods.
Try upping the miniumum wage federali's!
was the outrageous taxation of tea that was the major force for
the original revolution against England.
Less and less representation (or accountability) and higher and
higher taxes.
States simply feel their "due" this "revenue" (they don't even see
it as a tax anymore) and use fear and threats if we don't track
our "use tax".
To date, I have seen ZERO ACCOUNTABILITY. I have seen tons of
waste, tax dollars squandered on stuff we never wanted.
"We are missing out on our cut of $100 Billion in sales. That's
lost revenue." And exactly do I, the PAYER, get in return for yet
another tax of 7-10%? Pretty much nothing.
More tax + Nothing in Return = Tax Revolt Time.
Also, keep in mind that thanks to the Patriot Act, although the Constitution guarantees us the right to sort of free speech, exercising that right these days, particularly online is likely to get your name put on a watch list (at least until they can determine you are not a problem they need to be concerned with)
We are taxed on the iPod (or other player), taxed on the computer it's plugged into, taxed on the blank media to burn the song to (and anti-piracy levied here in Canada), taxed on the electricity to run it all...
Enough already. Do you really need to tax me on the bits of information too? Why don't you just tell everyone to go back to stealing music? Between record companies demaning more than $0.99 per song now that iTunes has worked, and then the govt wanting to tax it too, you may as well have a banner ad to Kazaa on the iTunes home page.
It's just greed, shame on you (govt).
I still have a fully functional 486 computer loaded with DOS and Windows 3. (Don't ask why I still have it; I have a sentimental attachment to this thing.) Anyway, it has no music player installed on it. If I transferred my digital music files to it and clicked on them, outside of filling up my 200MB hard drive, the computer wouldn't do anything except tell me it doesn't understand the extension.
This Dunderheads logic is hereby debunked!
A computer requires additional software to make sense of the file, the file itself is meaningless without it. Just because modern OS's have music players included with them doesnt mean the file enables the computer to perform an action or function. Microsofts Windows Lite offered in Europe doesnt have a media player bundled with it, because of a legal decision. If someone doesnt install a third-party player on a computer with that version, the files will be meaningless again.
Additionally, as others have pointed out, the legal morass regarding who owns the rights to digital music adds additional confusion to the discussion. The issue of whether the end user owns, or leases in perpetuity, the rights to the file has to be sorted out in court first, before the downloads can be taxed. If I dont own the file, then I shouldnt have to pay taxes on it, and thereby I give the true owner rights to restrict its use. If I own the file, the music companies should lose the ability to restrict how I can use my personal property.
Nuff said!
Following his logic, this means that EVERY file downloaded to the computer could be interpreted in the same way, because EVERY file causes the computer to perform a task . Graphic files, pictures, text files, PDF files, multimedia files et al. all do the same thing; they cause the computer to do something. AND THEY REQUIRE SPECIFIC SOFTWARE TO DO IT!
I reference again my ancient 486. If I booted that computer and pressed F5 to bypass the startup files, I couldnt view pictures, PDF files, multimedia files etc. Additionally, if I took my Linux workstation and stripped it down to the Kernel, I couldnt use those files. My Novell server (yes, Novell) doesnt understand any of those files either, but its fully operational for its intended purpose without that functionality. However, its a computer nonetheless, thereby fitting this Dolts interpretation.
Does this mean that WA is now going to interpret every file and page on the Internet as potentially taxable? Hell, were viewing them for free (mostly).
This whole system violates basic human rights and requires a major overhaul.
Most of what is now mandatory, should be only be supported voluntarily (by those who deem it worthy) and be required to provide accountablity on a regular basis.
The government will always do exactly the worng thing in
promoting new technologies and capabilities, it's a proven fact.
Then when sales or adoption rates slow down,... who do they
blame?
13 states that do... if you play wow or everquest, your supposed
to pay texes on that subscription. Its new as of 2 or 3 years ago.
I am amused by this one: '"Music is included because music downloads fit the definition of personal property," said Jill Midkiff, a spokeswoman for the Kentucky Department of Revenue.' I wonder if the state is willing to tell RIAA that as RIAA is insisting otherwise. Or will RIAA tell the state they are wrong and Kentuckians not have to pay?
And this one is simply a failure to apply the correct wording in truth: "...why should a stream of bits from iTunes or Walmart.com be tax-free?" Or, phrased another way, why shouldn't we charge you for numbers? Yes, life is becomming a game of numbers. Patent, trademark and copyright on numbers and formula (aka software) and charge for it.
This one is silly beuracracy, and I doubt will stand: "Washington law defines software as "a set of coded instructions designed to cause a computer...to perform a task," which tax officials have interpreted to include music, movies and e-books." as that takes a book to be equivalent to the act of writing or reading a book. Music, text (html!), pictures are all merely data, not executed. They cause the software to behave differently, not the CPU to do anything. In mathematical terms, it is a number or variable (the music) vs a function (the code/software/executable). Of course, if nothing is charged for it (html?) then they don't get taxes on it, unless it is s rebate deal.
"Not every business that offers music, movies or games over the Internet would be required to collect taxes right away, even if many more states begin to change their rules. That's because of the legal concept called "nexus," which means that a company can be taxed by a state only if it has a business presence there." Hmm, i.e. make sure they cannot operate in their state or be unable to price compettitively, OR, move out of the US. I think I'm leaning against the tax...
It's a failure, and points up how News.com is a shell of what it was in the 1990s.
This article does not cast Apple in any negative light. It's about taxes on downloadable media. And which company has been the most successful at SELLING downloadable media? Yeah, that would be Apple. So which company might stand to be most negatively impacted by taxed downloads? Ding, ding, ding. Apple again!
If anything, this article reinforces Apple's success in the downloadable media marketplace by pointing out that they are the 800 lb. gorilla. If you want to live in a bubble and pretend that market and government forces will have no impact on Apple's bottom line, you are indeed nuts.
And about the 99 cents issue: there's a certain appeal (call it marketing psychology) to keeping things easy and making them look inexpensive. A "buck a tune" is easy to grasp. $1.08 per song is not as attractive (nor as inexpensive, obviously). Why do you think Apple is working so hard to maintain streamlined pricing for all songs while the record companies push for variable pricing? Offering all songs for 99 cents contributes to iTunes ease of use. $20 gift cards mean ~20 songs. It's easy. It's symmetrical. It promotes sales. Taxes and odd pricing do not.
Be reasonable. Blaming CNet of Apple is a defensive knee jerk reaction to this interesting story.
-Mister Winky
SFW here!
2. The State Of Washington has NO State Income Tax, but has State Sales Tax, so now they're targeting Tax On iTunes...Citizen Gates + REAL pulling some political strings?
3. The Apple Corps is creating a BeatlesTunes Store for downloading the Beatles catalog of music. Maybe "The Taxman" will comes after them too, (Not just in England with their enormous tax rates), but in America as well. BeatlesTunes will be $$$.
4. STUPID IDEA GREEDY PEOPLE!
You laugh, but you know you could probably patent that.
Coservatives have controled the House & Senate & Executive Branch of the Gov't for 6 years.
The reason for "new taxes" is to make up for all the Billionaire Buddys of Bush Club getting all their tax refunds.
Stinking it to the Middle Class once again.
Your team has the ball. Your team has been in charge for the last 6 years. Don't blame us, we voted for the other guys. Conservatives are always yakking about "personal responsibility". Step up and be responsible -- your side f'd up.
Oh, wait, that would be admitting you were wrong... and we all know that a republican won't admit wrongdoing no matter how much evidence is stacked up against them.
Oh, wait, that would be admitting you were wrong... and we all know that a republican won't admit wrongdoing no matter how much evidence is stacked up against them.
What if I'm connected to a Wireless Access Point where the transmitter is in Kentucky, but I'm actually in Tennessee?
Seems like there are a lot of questions about how something like this could be enforced.
When I lived in WA many years ago while in the service, I bought a car from my home state of NY. Because I was on active duty and living out of NY State, I didn't pay NY sales tax. Washington would not let me register the car in their state unless I paid WA State sales tax. I refused and registered the car in NY, still without tax.
Also, while living there, I heard of WA officers targeting cars with Oregon temporary tags, especially those driving far north of the Oregon border. When stopped, the drivers were asked to prove Oregon residency. If they showed a WA address, they were nailed.
Load of crap. I am licensed to use music; I cannot and do not own it. It is not personal property. It the property of record labels or artists.
Download = Recieve
Upload = Send
If you do not own the file, you should not pay taxes. So the way around it is to show that Apple (Itunes) still owns the file due to copy protections that prevent you from being able to declare true ownership over the media. Whoever holds the DRM key is the true owner and you paid for the right to use it, not own it.