Technology Law | Intellectual Property | Society

Abstract: Digital Era Archives

In one of the most significant copyright settlements of the decade, the Internet Archive has agreed to a confidential resolution—reported to exceed $621 million—with several of the world’s largest music companies. The dispute stemmed from the Archive’s Great 78 Project, which aimed to preserve early 20th-century shellac recordings by digitizing and streaming them to the public. Plaintiffs, including Universal Music Group, Sony Music Entertainment, and Concord, alleged widespread infringement of copyright and neighboring rights in pre-1972 sound recordings. This article examines the legal issues at play, including the limits of fair use, the evolving framework for pre-1972 recordings under the Music Modernization Act, and the implications for cultural preservation efforts in the digital age.

I. Introduction

The Internet Archive (IA), a nonprofit institution best known for its Wayback Machine and extensive digital libraries, has long stood at the intersection of public access and copyright law. Its Great 78 Project, launched to preserve deteriorating 78 RPM records—many produced between 1900 and 1950—has now triggered one of the most consequential copyright settlements involving analog media in the streaming era.

While hailed by historians and archivists, the project drew the ire of major music rights holders, who alleged that IA’s digitization and public distribution of thousands of copyrighted sound recordings violated both federal copyright law and state-law rights applicable to pre-1972 recordings. This article reviews the litigation, legal doctrines involved, and broader cultural implications.

II. Background and Factual Context

A. The Great 78 Project

The Great 78 Project was initiated to preserve shellac-based recordings, primarily 10-inch discs that degrade with time and are difficult to play. The project digitized thousands of records—often obscure, long out-of-print works—and made them freely streamable online. The Internet Archive claimed the project served research, preservation, and educational purposes, with no commercial intent.

B. The Plaintiffs and the Allegations

In mid-2023, Universal Music Group, Sony Music Entertainment, and Concord filed suit in the Northern District of California, alleging unauthorized copying, distribution, and public performance of 4,624 sound recordings—a figure that grew from the initial claim involving 2,749 works.

The complaint alleged that:

• Many recordings were still under copyright protection;
• The IA did not seek licenses or permissions from rightsholders;
• The availability of these recordings undermined legitimate commercial markets (including paid streaming);
• IA’s use exceeded the bounds of fair use and was not protected under archival exceptions.

III. Legal Framework

A. Copyright in Pre-1972 Sound Recordings

Prior to the Music Modernization Act of 2018 (MMA), sound recordings fixed before February 15, 1972, were governed by a patchwork of state laws. The MMA provided for federal protection of pre-1972 sound recordings, establishing a licensing regime and extending protection terms based on the recording’s age.

The plaintiffs relied heavily on this new framework, arguing that IA:

• Did not comply with the MMA’s statutory requirements (e.g., filing notices of use, paying royalties);
• Was not eligible for the archival or library exceptions under §1401 of the MMA;
• Exploited recordings that continue to have commercial value in today’s market.

B. Fair Use Doctrine

IA’s primary defense was fair use under 17 U.S.C. § 107. Courts typically evaluate fair use based on four factors:

1. Purpose and character of the use – IA argued that its use was non-commercial, educational, and transformative.
2. Nature of the copyrighted work – While many recordings are creative, IA emphasized their historical and documentary value.
3. Amount and substantiality used – Full copies were made available.
4. Effect on the market – Plaintiffs claimed the IA’s free access substituted for licensed distribution.

While fair use may protect some uses by libraries and archives, courts have generally been cautious about applying it to widespread digital dissemination—particularly of entire works.

IV. The Settlement

On September 15, 2025, the parties announced a confidential settlement, with press reports estimating the value at $621 million. While the terms remain sealed, likely components include:

• Monetary damages (possibly structured over time or involving insurance contributions);
• Content takedown or access restrictions for identified recordings;
• Future compliance obligations (e.g., licensing or use notifications);
• No admission of liability by IA.

The size of the settlement—roughly $134,000 per work—is consistent with statutory damages allowed under the Copyright Act for willful infringement ($150,000 maximum per work, 17 U.S.C. § 504(c)).

V. Implications for Law and Policy

A. Cultural Preservation and Legal Risk

This case exposes the legal vulnerability of preservation projects in the digital age. Even well-intentioned initiatives can face extraordinary liability if they touch commercially protected content. Archivists, libraries, and nonprofit institutions must tread carefully, especially when works are available for public streaming or download.

B. Statutory Damages as Leverage

The threat of immense statutory damages—multiplied across thousands of works—places extraordinary pressure on defendants to settle. Critics argue this creates a chilling effect on preservation and fair use efforts, even when market harm is speculative or nonexistent.

C. The Unfinished Business of the Music Modernization Act

The MMA sought to modernize outdated laws governing sound recordings, but it also imposed new burdens on noncommercial users. Institutions must navigate notice filing, royalty obligations, and the scope of permissible archival use—all of which remain subject to litigation and regulatory interpretation.

Conclusion: Digital Preservation Warning Shot

The Internet Archive’s $621 million settlement with the major labels is more than a resolution of past conduct—it is a warning shot across the bow of digital preservation. While the law must protect the legitimate interests of rightsholders, it must also evolve to support the public good of preserving and accessing cultural heritage. Whether through legislative reform, licensing collectives, or expanded fair use precedents, the legal system must find better ways to reconcile access with ownership in the 21st century.