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LC's Section 108 Study Group website [http://www.loc.gov/section108/]  
is a good
place to start an investigation into this issue, including a series  
of public comments
by librarians concerning the production of surrogate copies.

And for the record, the first section of 108 reads:

§ 108· Limitations on exclusive rights: Reproduction by libraries and  
archives
(a) Except as otherwise provided in this title and notwithstanding  
the provi-
sions of section 106, it is not an infringement of copyright for a  
library or archives,
or any of its employees acting within the scope of their employment,  
to repro-
duce no more than one copy or phonorecord of a work, except as  
provided in
subsections (b) and (c), or to distribute such copy or phonorecord,  
under the
conditions specified by this section, if—
(1) the reproduction or distribution is made without any purpose of  
direct
or indirect commercial advantage;
(2) the collections of the library or archives are (i) open to the  
public, or
(ii) available not only to researchers affiliated with the library or  
archives or
with the institution of which it is a part, but also to other persons  
doing re-
search in a specialized field; and
(3) the reproduction or distribution of the work includes a notice of  
copy-
right that appears on the copy or phonorecord that is reproduced  
under the
provisions of this section, or includes a legend stating that the  
work may be
protected by copyright if no such notice can be found on the copy or  
phono-
record that is reproduced under the provisions of this section.

cheers,
  Brandon.

____________________________________
Brandon Burke
Archivist for Audio Collections
Hoover Institution Archives
Stanford University
Stanford, CA 94305-6010
vox: 650.724.9711
fax: 650.725.3445
email: [log in to unmask]

On Jan 8, 2008, at 6:24 AM, Farrington, Jim wrote:

> Libraries can legally circulate almost anything they want. The  
> exception
> would be personal archives for which a contract was drawn up that
> specifically excludes items from even being shown, but I'm assuming  
> you
> are asking about commercial items bought for the collections. Whether
> they choose to circulate items--books, recordings, videos,  
> periodicals,
> computer programs, artwork, video games, or any other physical  
> thing--or
> not is entirely at the discretion of that library, regardless of its
> size or primary clientele. I guess I should also say that I am talking
> about original items, not surrogates (the scenarios mentioned below
> strike me as being extremely questionable, legally--section 108 of  
> Title
> 17 covers library exceptions to U.S. copyright laws, whereas  
> section 107
> covers individuals).
>
> Jim Farrington
> Head of Public Services
> Sibley Music Library
> Eastman School of Music
> 27 Gibbs St.
> Rochester, NY  14604
> 585-274-1304    585-274-1380 (f)
>
> -----Original Message-----
> From: Association for Recorded Sound Discussion List
> [mailto:[log in to unmask]] On Behalf Of Tom Fine
> Sent: Tuesday, January 08, 2008 8:45 AM
> To: [log in to unmask]
> Subject: [ARSCLIST] Libraries, circulation copies and fair use
>
> Hi All:
>
> I'm hoping we have some library-policy experts here that can point  
> me to
> some answers.
>
> Can a library -- not a big institution or university, just a local
> community library -- circulate
> single copies of out-of-print CD's and DVD's they have in their
> collections? I did a quick Google
> and couldn't find a definitive answer. I thought Stanford had a
> simple-to-understand "yes and no"
> guide to fair for libraries use but I couldn't find it this  
> morning. If
> I recall that web page,
> which I read some time ago, it is fair use to take out of circulation
> and circulate a single copy of
> an item that is either non-replaceable or replaceable at great cost  
> (ie
> out of print).
>
> Further, what about circulating single copies of ALL CD and DVD media
> given the proven fragile
> nature of the media? My local library head tells me that she gets DVD
> failure reports after 10 or
> fewer circulations in some cases, and most older CD's in the library
> system are badly scratched and
> sometimes gouged. Books on CD are bigger problems because some
> publishers do limited dupe runs onto
> CDR media and that wears out quickly from typical in-car handling.
> Audiobook publishers vary on
> replacement policies, the library lady told me. Some do it for the  
> cost
> of postage if you send back
> the damaged disc. Some charge as much as $20 per disc. The librarian
> told me that local libraries
> are in a big bind with all of this because printed books are just not
> their bread and butter
> anymore. DVD's are a huge circulation item, as are kids' computer
> software and games. Music CD's are
> a somewhat popular circulation item. But the big one is audiobooks,  
> she
> said.
>
> When I was a kid, if I went to the local library and wanted to  
> borrow a
> kiddie-sound thing that was
> on a cassette, the library would run off a copy and circulate the copy
> with me. When I brought the
> tape back, they'd put it in a pile to be re-copied with something else
> and re-circulated. The
> librarian explained to me that the albums were expensive to replace  
> and
> kids had a habit of mangling
> cassette tapes. I'm not sure how strict they were about only having  
> one
> copy in circulation but I
> think that requirement may have been tightened up with a law made  
> after
> I was a kid. I grew up in a
> town that had plenty of lawyers living in it, so I doubt this  
> procedure
> was patently illegal back
> then.
>
> Has the ARSC published any articles previously that bring some clarity
> to all of this fair-use
> thing? I think it would be a very helpful resource, one version for
> local libraries and small
> circulating collections, one version for big institutions like
> university libraries and one version
> of individual collectors (ie do we pose any risk of arrest if we  
> choose
> to back up our personal
> collections to hard drive? -- there seem to be many different opinions
> on this, from the
> ultra-paranoid to the "what me worry".
>
> -- Tom Fine