New state law requires digital retailers to specify if purchases are to own products or are instead short-term, revocable licenses

SACRAMENTO, Calif. – On Wednesday, Governor Newsom signed Assembly Bill 2426 into law which requires sellers of digital-based goods, like movies or video games, to tell buyers if they are only receiving a license to use digital media instead of owning the content they purchase.

The bill will take effect on Jan. 1, 2025.

"As retailers continue to pivot away from selling physical media, the need for consumer protections on the purchase of digital media has become increasingly more important," explained Assemblymember Jaqui Irwin, who authored the bill. "I thank the Governor for signing AB 2426, ensuring the false and deceptive advertising from sellers of digital media incorrectly telling consumers they own their purchases becomes a thing of the past."

Digital media purchases advertise the option to "buy" or "purchase", but some purchases have restrictions on their use or have been entirely removed from a buyer's media library, often without a refund.

Instead of owning that content, companies that sell digital media may instead be offering buyers a limited, revocable license to enjoy the material.

"California is now the first state to recognize that when digital media retailers use terms like 'buy' and 'purchase' to advertise digital media licenses, they are engaged in false advertising," added Aaron Perzanowski, Professor of law at the University of Michigan and a leading researcher on the intersection of personal property and intellectual property law. "Consumers around the world deserve to understand that when they spend money on digital movies, music, books, and games, those so-called ‘purchases’ can disappear without notice. There is still important work to do in securing consumers’ digital rights, but AB 2426 is a crucial step in the right direction."

While this may seem like a cutting edge phenomenon, a white paper published by the Department of Commerce's Internet Policy Task Force in 2016 stated, "[C]onsumers would benefit from more information on the nature of the transactions they enter into, including whether they are paying for access to content or for ownership of a copy, in order to instill greater confidence and enhance participation in the online marketplace."